"The ability to work with IBM and take advantage of the technologies and processes they have in place was a key factor in this decision," said Gordon. "American will retain responsibility for strategy through the partnership with the transition of functions taking place over a period of two years."

Researchers at Gartner estimated that the market for HR-related business process outsourcing reached $24.6 billion in 2006, a roughly 5 percent gain over 2005. However, the research firm has also predicted that some services providers might struggle with profitability during 2007, impeding growth of the U.S. sector of the market specifically.

HR remains the largest segment of the worldwide business outsourcing market at 18.7 percent, Gartner reported, with payroll and benefits administration ranking as the most popular tasks that are being farmed out to service providers.

According to a report published by researchers at Boston-based Ovum Summit in Aug. 2006, IBM topped rivals, including CA, Hewlett-Packard, and BMC Software, in several categories of a recent customer poll, winning praise as the industry's "most strategic IT management software vendor."