Thursday, 11 December 2008

News from BPO-land

(By Anthony Miller) A couple of items from some of the not-so-usual BPO suspects.

First, Serco, which is to acquire £24m revenue Indian BPO player, InfoVision, for £27m. The deal (see here) had been mooted in the Indian press over the past couple of weeks and indeed InfoVision had already been rebadged Serco India when we peeked at the website again this morning. This is mainly a play for the fast-growing domestic Indian BPO market on Serco’s part, although InfoVision also services the likes of GE, Talk Talk (Carphone Warehouse), Amex and ABN Amro. Serco has always been a bit of an odd-bod in the UK S/ITS (software and IT services) and back-office BPO scene, with its main focus on public sector infrastructure and blue-collar outsourcing. Its acquisition of ITNET in early 2005 arguably legitimised its S/ITS credentials though this didn’t seem to raise Serco’s profile much in our space. The last major ICT deal we spotted for Serco was back in Feb. ’08 with Glasgow City Council, worth £265m over ten years. Anyway, the InfoVision deal looks a smart move – indeed, many of the top-tier Indian SIs are turning their attention to their domestic market (some, like TCS, Wipro and HCL got their start there), particularly now that their traditional export markets are looking somewhat less than buoyant.

The other unusual BPO suspect, Mouchel, issued an upbeat trading statement (see here), perhaps not surprising given its focus on UK government, regulated industries and highways. Like Serco, Mouchel is a little out of left-field in the traditional S/ITS/BPO space, though its Aug. ’07 acquisition of HBS (the erstwhile Hyder Business Services) pushed it even more our way, rather like Vertex. In amongst all the positives in the trading update was a signal that Mouchel may withdraw from bidding for new BSF (Building Schools for the Future) contracts, finding the procurement model “lengthy and costly”. Northgate and RM are just two of the traditional S/ITS players who seem to have achieved quite some success in BSF. However, Mouchel is looking to grow its IT business so it looks like we will be seeing more of them.

It must be noted, though, that neither Serco, with 5% margins, nor Mouchel, with 6% margins, come within ‘cooee’ of UK BPO leader, Capita’s 12% margins, which shows that white collar BPO is where the leverage is when you get the model right.

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