Friday, December 15

2010’s Last Minute Outsourcing Deals, Acquisitions And Expansions

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The year 2010 is almost at an end and prospects for the outsourcing industry still remain strong, especially in sectors such as IT and healthcare, specifically medical billing outsourcing and medical coding outsourcing. In preparation for the year end and the coming year, many companies have been finalizing end-of-year deals, closing acquisitions, and pushing through expansion plans in a rush to end 2010 right, as well as start 2011 in a better shape than the past year.

Just this past week, notable contracts have been signed including the $1.4 billion outsourcing contract awarded by German utilities company, E.ON (ETR:EOAN) on the 15th of December to Hewlett-Packard (NYSE:HPQ). HP will be providing infrastructure technology outsourcing services to E.ON where it will be managing E.ON’s data center and workplace services. On the same day, E.ON also closed another outsourcing contract with Deutsche Telekom’s (ETR:DTE) business-customer unit T-Systems, for the management on international speech and data communications. The agreement is slated to run for five to seven years at a reported 1 billion Euros. Meanwhile, business process outsourcing provider Firstsource Solutions (NSE:FSL) also signed an agreement, this time on the 20th of December, with IP infrastructure and service solutions provider GENBAND. The company will be providing GENBAND with customer services and other related operations beginning next year in January.

Several acquisitions were also announced this week, most notably the three outsourcing related acquisitions that were all announced on the 20th of December. This includes an acquisition by outsourcing marketplace provider, Freelancer.com, who announced that it has acquired LimeExchange.com of Lime Labs LLC. Freelancer.com will be migrating all of LimeExchange’s 2 million users onto the Freelancer.com platform. Another acquisition is Towers Watson’s (NYSE:TW) plans to acquire Aliquant, a health and welfare benefits administration firm. According to Pat Amendola, North American Leader of Towers Watson’s Technology and Administration Solutions, “This agreement strengthens Towers Watson’s position as a premier provider of health and welfare outsourcing, and provides greater economies of scale to help us maintain our service quality while supporting our longer-term growth goals.” Last but not least is CSC’s (NYSE:CSC) announcement that it has acquired Virginia based IT systems and services company, CenTauri Solutions. “With the addition of CenTauri Solutions, CSC strengthens our capabilities in providing IT services and systems integration solutions that deliver value to the Defense Intelligence Agency and C4ISR customers,” said James W. Sheaffer, president of CSC’s North American Public Sector line of business.

Outsourcing company EXLService (NASDAQ:EXLS) on the other hand, announced the official inauguration of its new global delivery center in Noida, India, which marks its first phase of expansion plans in the locality. The expansion is slated to expand EXL’s workforce in the country by as much as 2,200 seats working in the facility. Work in the center is slated to begin immediately with services slated towards new client acquisitions as well as the expansion of existing client operations.

With the year almost concluded and a fresh one set to start, it will be interesting to see how the outsourcing industry will fare once again. With rumors persisting about a second dip in the market, and the precarious ongoing recovery from the global downturn, the outsourcing climate may still go either way. But taking into account that outlook has largely remained positive, and even Accenture’s (NYSE:ACN) better than expected first quarter fiscal results for 2011, it’s easier to envision a promising future ahead for outsourcing in 2011.

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