To such acquisitions, not only is the acquisition an indicator of the continuous growth of the outsourcing industry, it is also indicated the increasing number of the BPO players acquiring captive client centers. The investors respond positively to such acquisitions, the following day when the announcement of the Cognizant’s acquisition of UBS’ India Service Center Private Limited came, Cognizant’s stock jumped to $40.15 with the trading volume higher than the previous day. The cognizant gets to expand its market reach and UBS gets to lower costs. With the UBS’s sale of the outsourcing units, the firm is shifting from a buy rather than a build strategy for the offshoring needs, enabling it procure services from lower-cost locations.
The UBS signed a 5 year $442 million service agreement with Cognizant under which Cognizant will provide outsourcing, IT and remote infrastructure management services to UBS divisions around the globe. The UBS and Cognizant’s deal is a classic model for expanding market reach in the BPO industry. The model is called the Captive Spin-Off. Spinning of client shared service center is a classic model for the growing a BPO business. A wave of similar transactions to follow as the aging Captive SSC’s look for step change at a time when their owners are more eager than ever to covert the assets into cash.
The Information Technology outsourcing providers have seen their historic 20 to 30 percent CAGR evaporate and are now looking for a new ways to grow. Some of the recent captive diversities included American International Group Inc. captive to Mphasis and Schneidor Logistic and Amex’s captives to EXL Service Holdings Inc. While the captive acquisition are increasing the number of the global banks expanding its captive operations. An estimated 28 companies have set up captive operations in Asia,. Europe Latin America and India bringing the number of captives being set up globally to an 18 months high.
REFERENCE:
http://www.blog.infinit-o.com/bpo-increasing-acquisition-captive-client-centers/
