SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

CHANNEL BY TOPICS


QUICK LINKS




SYNNEX Picks Up IBM's CRM BPO Business in Nine-Figure Deal

TMCnews Featured Article


September 11, 2013

SYNNEX Picks Up IBM's CRM BPO Business in Nine-Figure Deal

By Steve Anderson, Contributing TMCnet Writer


Recently, SYNNEX and IBM (News - Alert) got together to bring out a release that offered the story of a very big deal, in which IBM got a large sum of cash (along with a healthy dollop of SYNNEX common stock) and SYNNEX (News - Alert) got IBM's customer care services business. This is actually a very important move for SYNNEX, as—thanks to the influx of business brought around by the acquisition—SYNNEX's Concentrix is now a top 10 provider in the customer relationship management (CRM) business process outsourcing (BPO) market.


The deal, at last report, represented a total value of $505 million, with $430 million of that in cash and $75 million in SYNNEX common stock. But that hefty price tag (News - Alert) comes with a large new source of cash flow, as the deal is expected to give SYNNEX fully $120 million in earnings before interest, taxes, depreciation and amortization (EBITDA). Additionally, it's expected to represent $0.55 in diluted earnings per share, leaving aside the costs of the first 12 months of the operation, including integration costs and various one-time charges.

In terms of BPO, client needs have shifted to focus on alternative delivery models with a particular focus on high-value business outcomes and accompanying insights. This puts a lot of pressure on firms that would provide BPO services, and with SYNNEX's new acquisition, this gives SYNNEX's Concentrix a lot of extra credibility in the marketplace. Thanks to this new infusion of capability, Concentrix now boasts a broader reach over both geography and industry, offering up what IBM global process services general manager Lori Steele describes as a way to “leverage the combined deep expertise, scale, process innovation and investments in high value industry platforms and assets to provide the customer experience and service innovation you have come to expect from IBM.”

Steele elaborates by noting that “the pace of change in customer care requires constant innovation. This acquisition by SYNNEX further enhances our mutual commitment to client satisfaction through one of the world’s top customer experience BPO providers. Clients can invest with confidence in the proven abilities of these two leaders to deliver the best customer care solutions.”

The two groups are set to operate independently until the transaction is complete, a process that is likely to take a few months due to the various regulations and customary closing conditions involved in the matter. When the process is complete, Concentrix will represent fully 45,000 employees, with over 300 clients speaking 40 different languages, making it a truly global affair and one of the biggest names in the field.

It's somewhat unusual that IBM would sell off a chunk of business in a growing field that represented such a clear cash flow source, but then again, it could have been that IBM simply needed some capital to develop in a completely different direction—IBM has a lot of irons in a lot of fires, after all—and moved to take a major chunk of the business that would have been brought in all at once. It's not out of line for this to happen; it's just more a noteworthy point than anything else.

Still, it's clear that the deal works well for both sides; Concentrix can develop its line into a major part of the larger ecosystem and IBM gets a nice slug of cash and a share of the SYNNEX operation all at once. Hopefully both sides will ultimately come out ahead on this one.




Edited by Alisen Downey







Technology Marketing Corporation

2 Trap Falls Road Suite 106, Shelton, CT 06484 USA
Ph: +1-203-852-6800, 800-243-6002

General comments: [email protected].
Comments about this site: [email protected].

STAY CURRENT YOUR WAY

© 2024 Technology Marketing Corporation. All rights reserved | Privacy Policy