This week’s announcement of Synnex’s $505-million acquisition of IBM’s customer services business is big news for the customer relationship management (CRM) business process outsourcing (BPO) market, according to Margaret Goldberg, IT services analyst at Ovum.
Synnex will acquire IBM’s worldwide customer care business process outsourcing services business for $505-million, consisting of approximately $430-million in cash and $75-million in stock. The acquisition will be branded and fully integrated with Concentrix, a wholly owned subsidiary of Synnex.
As part of the transaction, Synnex will enter into a multi-year agreement with IBM, and Concentrix will become an IBM strategic business partner for global customer care business process outsourcing services.
“The merging of IBM’s CRM business with Synnex’s subsidiary Concentrix elevates the previously tier two player into one of the top players in the industry, and we expect it to make quite a bit of noise given IBM’s history, capabilities, and client base that Concentrix is picking up,” she says.
“What’s more, Synnex now picks up IBM as a major alliance partner, as the two vendors announced a multi-year strategic business partnership where Synnex will provide global CRM BPO services for IBM.”
Goldberg adds: “Given IBM’s mature CRM offerings and fairly deep capabilities, the acquisition will allow Concentrix to capitalise on key trends in CRM outsourcing that Ovum’s research has identified as major growth areas for the industry including the ongoing growth in the popularity of newer channels such as social media and SMS.
Additionally, IBM’s numerous delivery centres globally means Concentrix will now be able to deliver services from a much broader range of locations.
“This transaction illustrates the continuous effort of CRM vendors to diversify, as the acquisition will help Concentrix increase the depth and breadth of its offering including capitalising on technology trends from mobility to cloud systems to analytics. The outsourced contact centre sector has performed well with several of the top players posting improved year-on-year revenues in the first half of the year.
“The deal is also an interesting move for IBM, as the IT powerhouse – bested by rocky earnings as of late – pursues a strategy of exiting relatively lower-margin businesses (and acquiring other companies) to concentrate on higher value-add and potentially more lucrative areas in IT services, consulting and cloud.
“With this deal, which will close in a few months, IBM will still be able to offer CRM BPO services as part of its end-to-end value proposition to customers, without shouldering the financial challenges of that business. We will be curious to see whether IBM makes similar decisions regarding other parts of its business going forward.”