The Associated Press
and The Cincinnati Enquirer

Procter & Gamble Co., building on its effort to hire out some services under multiyear contracts, said Tuesday it has signed IBM to a 10-year, $400 million deal to handle employee services.

IBM will support almost 98,000 P&G employees in almost 80 countries with services such as payroll processing, benefits administration, compensation planning, expatriate and relocation services, and travel and expense management.

Cincinnati-based P&G said the arrangement will allow it to cut costs and focus on its core businesses.

Damon Jones, external relations manager for P&G, said about 75 to 100 local workers on the payroll of the consumer-products giant would go to work for IBM at the end of the year.

"No one will lose their job over this deal," Jones said.

IBM also will provide application development and management of P&G's human resources systems.

The agreement is effective Jan. 1, when IBM takes over operation of human resources service centers in San Jose, Costa Rica; Newcastle, England; and Manila, Philippines.

IBM and Procter & Gamble started negotiations about five months ago, as P&G has been looking at outsourcing a range of service and support functions for about two years.

The deal with IBM is the third major outsourcing pact approved by P&G this year.

An agreement with Jones Lang LaSalle, a Chicago-based facilities and real estate management firm, in June shifted about 600 jobs from the P&G payroll to Jones Lang LaSalle. That was a five-year, $700 million contract to manage P&G's facilities.

In May, Hewlett-Packard Co. received a 10-year, $3 billion contract to take over P&G's information-technology operations, a deal for which IBM also competed. About 2,000 jobs were affected.

P&G makes and sells products including Tide detergent, Crest toothpaste, Pampers diapers, Pringles snack chips, Iams pet foods, Folgers coffee and Clairol hair care products.

Enquirer reporter John Eckberg contributed to this report.