Outsourcing Companies Step-Up Acquisitions

The outsourcing industry has been defined just as much by acquisitions, as much as it has been defined by mega deals: think Xerox (NYSE:XRX) and Affiliated Computer Services. This November, several companies have announced acquisitions of other firms in a bid to redefine their services, and expand their business, and perhaps to give rise to the next Xerox-ACS caliber acquisition, within different industries including legal process outsourcing, IT outsourcing and call center outsourcing.

New York headquartered company, Accenture (NYSE:ACN), has acquired business process management services provider, Knowledge Rules.  The company announced on the 2nd of November that it has acquired the Philadelphia-based company to utilize Knowledge Rules’ expertise in PegaSystems.  According to Accenture’s Chief Technology Architect Paul Daugherty, “This acquisition immediately increases our capacity to implement Pegasystems-based solutions, and will enable us to train and develop more people, more quickly.”  A few days later on the 10th of November, Accenture announced that it has successfully acquired Beijing-based software company, Mogenesis, a provider of mobile software outsourcing services.  Following this, on the 19th of November, Accenture also completed its acquisition of Ariba, Inc.’s (NASDAQ:ARBA) Ariba Sourcing Services, an acquisition that had previously been announced on the 6th of October.  Hot on the wheels of these developments and Accenture once again advised that they are acquiring another company, CAS Computer Anwendungs-und Sytemberatung AG (CAS).  A Kaiserslautern, Germany based company, CAS is a provider of customer relationship management (CRM) and mobility software provider.

It has certainly been a busy month for Accenture as it has been acquiring companies left and right, but other companies have been making notable acquisitions as well.

Financial news and information provider Thomson Reuters (NYSE:TRI) announced on the 18th of November that it is acquiring legal process outsourcing services provider, Pangea3 .  Commenting on the acquisition, Peter Warwick, Thomson Reuters President and CEO said that, “[Thomson Reuters] will now bring to the legal marketplace a responsive, high-quality, transformative resource for a broad range of legal support work. This is particularly important as law firms and general counsel adjust to the realities of the ‘new normal,’ where efficiency, quality and responsiveness are paramount,” signaling Thomson Reuters entrée into the highly-competitive legal process outsourcing business.

This is not however, the only movement in the LPO space as days before the announcement by Thomson Reuters, the acquisition news that had been making rounds in the LPO space was the acquisition of legal process outsourcing company, LawScribe by UnitedLex on the 11th of November.

A number of acquisitions from smaller companies also came through this month, including the acquisition of IT outsourcing and business process outsourcing provider TechTeam Global (NASDAQ:TEAM) by Stefanini International Holdings Affiliate, Stefanini IT Solutions for $93.4 million.  The news came days before TechTeam Global reported its third quarter 2010 results wherein the company reported a net loss of $8.4 million following the company’s sale of its government subsidiary, TechTeam Government Solutions, to Jacobs Engineering Group (NYSE:JEC).

We will likely see more acquisitions coming through before the year ends.  Other companies such as Infosys (NASDAQ:INFY) and Globallogic, have already announced that they are in the market for acquisitions this year and the next, as companies continue to search for the winning combination that may ultimately land them at the top of their field.

Author: Audrey B.