Fidelity gets bank pact, plans jobs
While former FleetBoston Financial Corp. employees are bracing for layoffs in the merger with Bank of America, the acquisition will slightly pad the payroll of one Boston financial services firm: Fidelity Investments.
Bank of America yesterday awarded Fidelity a large chunk of its human resource work, which will create about 375 jobs in Marlborough and Merrimack, N.H. The deal ratchets up Fidelity's presence in human resources, a growing source of revenue for the firm. Fidelity is the largest manager of mutual funds in the nation.
"We're ecstatic," said Peter Smail, president of Fidelity Employer Services Co., the company's outsourcing business. "It's one of the largest relationships we've established in this big and rapidly growing business."
Under the agreement, Fidelity will assume responsibility for Bank of America's payrolls, health and welfare programs, and 401(k) retirement plans. Fidelity, which already lists big-name companies such as IBM Corp. and General Motors Corp. as its customers, said the seven-year Bank of America contract ranks in its top five, though it would not disclose the terms.
It has become common for companies to outsource some human resources work, especially to financial firms, which already answer customer questions and keep detailed records when managing the companies' retirement plans. The work is primarily administrative, but it turns a steady profit: Fidelity says its outsourcing work accounts for as much as one-third of its $9.2 billion revenue stream.
"Delivering benefits and payroll is not a core business for most companies," Smail said. "It's a core business for Fidelity."
Fidelity already did similar work for Fleet, but a California company called Exult Inc., held Bank of America's contract. Soon after the two banks agreed to merge last fall, Bank of America asked for proposals from both companies.
Though Bank of America would not list all the reasons why it chose Fidelity, a bank spokesman said the decision came in part because of its location in New England. The Charlotte, N.C., bank plans to cut 12,500 jobs, but it has pledged to keep the same number of jobs in New England as it merges with Fleet.
"We're always looking for positive ways to grow employment in New England," Bank of America spokesman Scott Scredon said. "New England is going to benefit from this."
Smail, the Fidelity executive, said the company looked at the merger as both a "challenge" and an "opportunity." Fidelity executives flew to Charlotte to talk to the bankers face to face, and Bank of America personnel came to Massachusetts and New Hampshire as well, Smail said.
Exult, the California company that lost the largest chunk of its work, did not respond to questions yesterday. But the company said in a statement that it will retain some aspects of its old deal with Bank of America, including recruiting, temporary staffing, and accounts payable.
"Bank of America is a valued client, and we are pleased to have been asked to support their integration plans by expanding many of our services across the parts of the company added through the FleetBoston merger," chief executive Jim Madden said in the statement.
Exult stock plummeted $1.41 to $4.91 a share, a 52-week low; Bank of America's shares rose 92 cents, to $81.97.
Sasha Talcott can be reached at stalcott@globe.com.
