BP Amoco Is Set to Outsource Accounting in $1.1 Billion Deal
BP Amoco PLC, taking a further step in its cost-cutting efforts, is expected to announce today that it will transfer much of its U.S. accounting and back-office operations to PricewaterhouseCoopers LLP in a $1.1 billion, 10-year deal.</br></br>The transaction is expected to be among the largest of its kind in the fastgrowing business-outsourcing industry, in which companies have been unloading functions that once were thought inseparable in a multinational corporation. PricewaterhouseCoopers executives credited technology with enabling such outsourcing, making it possible to conceive of a company that concentrates on areas where it has an advantage and leaves noncore functions to others.</br></br>"It's a relatively new and emerging way for large organizations like BP Amoco to focus on what they do best and improve their performance," said Ray Bayley, partner in charge of business-process outsourcing at the accounting firm.</br></br>Under the deal, the oil giant's backoffice and accounting operations in Tulsa, Okla., Chicago and Houston will be taken over by PricewaterhouseCoopers. About 1,200 employees, mostly in Tulsa, will be transferred from BP Amoco to the accounting firm, but there won't be employee reductions or salary cuts.</br></br>PricewaterhouseCoopers will assume the financial-reporting, accounts-payable and accounting responsibilities for BP Amoco's chemical and oil-exploration and production units in the U.S., excluding Alaska. The U.S. refining and marketing operation isn't part of the arrangement. The sides are currently negotiating a deal for the Canadian operations that could be announced early next year. PricewaterhouseCoopers will also take over the acquisition, maintenance and upgrading of technology linked with providing the services.