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KKR-Backed Deal Offers Alternative To Scranton-Style HR
5 March 2010:
A Kohlberg Kravis Roberts & Co. portfolio company announced an add-on deal Michael Scott would be sure to get behind.
The maladroit boss of NBC’s “The Office,” is none too keen on the Scranton branch’s human resources officer Toby. Turns out, Dunder Mifflin might not be so thrilled with having to maintain staffers like Scott’s arch-nemesis.
“A lot of companies don’t want to do back office processes…HR outsourcing businesses take this problem away from companies,” a person familiar with the human resources outsourcing space said. “If you have the scale and do this for a lot of (clients) you can do it more cost effectively than a (client) can do it, itself.”
That theory is likely behind a subsidiary of KKR’s Northgate Information Solutions Ltd. agreeing to buy Convergys Corp.’s human resources management division for $100 million.
NorthgateArinso, an international human resources software and services provider, is acquiring the division to strengthen its U.S. presence. The Jacksonville, Fla.-based unit of Convergys has around 2,300 employees, while NorthgateArinso currently has only about 300 workers. Convergys had expected the business to post about $250 million of revenue this year.
Cost-savings for the customer can vary, depending on what functions they want NorthgateArinso to take over, but can range from the single digit percentage points up to around 20%, the source said.
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Source: The Wall Stree Journal