Cable & Wireless calls time on outsourced HR

Cable & Wireless (C&W), one of the pioneers of HR outsourcing, has taken its HR transactional services back in-house

The telecoms giant is not renewing its five-year contract with Accenture, which expired at the end of last month.

Ian Muir, international HR director, cited the company's shrinking UK workforce, once 10,000-strong but now falling towards 3,500, as a key reason for abandoning outsourcing.

"The company had changed so much that the reasons for outsourcing HR in the first place had disappeared. Now we don't have quite such a strong agenda for doing things in such a process-driven and highly structured way," he told PM. "The economics aren't so compelling now that we're a different kind of enterprise."

C&W has been one of many victims of a global recession in the telecoms industry. Muir, who until three days ago was group director of HR policy and employee relations, told delegates that what followed the dot-com bubble had been described as a "nuclear winter".

C&W’s group-wide headcount had declined from 57,000 in the late 1990s to 14,000 today. There were many disposals, while an ill-timed US venture put the firm behind the competition in its efforts to focus on customer service.

Last year C&W acquired Energis, which brought with it a stronger emphasis on communications and employee involvement, according to Muir. Since May the share price has risen by 40 per cent.

"Ending the Accenture contract was a reflection of our being a different business," he said, stressing that C&W had remained on good terms with them and had "very much enjoyed the relationship".

But Muir admitted that some tacit knowledge had been lost through outsourcing. "The fact is that the line wants some measure of person-to-person support and advice and guidance," he said.

While the contract was in operation, 80 per cent of Muir's colleagues left C&W, while its HR knowledge and skills had been increasingly vested in the system and advice coming from Accenture, he added.