Bank of America Corp., the parent company of the biggest U.S. bank, said Tuesday it agreed to turn over certain personnel functions to Web-based human resources provider Exult Inc. in a 10-year, $1.1-billion deal that could reduce the banking company's costs by more than 10% a year.
The companies, which had tentatively agreed to the deal a month ago, said the contract would give Irvine-based Exult more than $100 million a year in revenue.
Under the terms of the pact, Exult will take over various human resources services for the Charlotte, N.C., company, including payroll, benefits administration, employee data records and management and human resources information technology and services.
Exult said it expects to offer jobs to more than 600 Bank of America employees in the human resources, finance and information technology areas. Exult also will run a full-scale client service center in facilities leased from Bank of America in Charlotte and will buy related assets.
The banking concern also agreed to buy 5 million shares, or 5.5%, of Exult stock and a warrant to purchase an additional 5 million shares.
In barely two years of operations, Exult is making inroads with its efforts to use the Internet for managing human resources services for large, multinational corporations.
Last December, it signed a $600-million, five-year contract to handle BP Amoco's human resources need in the United States and the United Kingdom. It was hailed at the time as an unprecedented move to use the Internet for personnel operations, and it made Exult an instant player in the fast-growing outsourcing business for human resources specialists.
Under that contract, Exult is using the Internet to allow BP Amoco employees to handle a multitude of tasks, from checking in-house job opportunities to changing benefits. BP Amoco expects to save $4 billion in expenses.
Though young, Exult's executives have long histories in human resources. Its founder, James Madden, was president of MCI's $2-billion outsourcing unit, and Barbara Williams, Exult's vice president, helped manage human resources for Pacific Gas & Electric Co.
In June, Exult went public with an offering that raised $60 million, less than half of what it originally planned. It sold 6 million shares at $10 each after cutting the size of its sale by a third and slashing the asking price from as high as $15 a share.
Exult stock lost 38 cents Tuesday to close at $10.38 a share on Nasdaq, while Bank of America's stock inched up 31 cents to end at $39.63 a share on the New York Stock Exchange.
Bank of America, with $680 billion in assets, has full-service operations in 21 states and the District of Columbia.
Reuters was used in compiling this report.