KUHN CAPITAL Sunday, February 25, 2018
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IBM: Outsourcer Rising

February 1

IBM plans to add another outsourcing arrow to its growing business services quiver: Ireland's Equitant, whose 200 employees specialize in handling clients’ accounts receivable collections. The deal is pending regulatory approval.

Big Blue is on an M&A tear. Since 2004 it has acquired 20 companies, half of them in the technical services outsourcing industry. The hit parade features Schlumberger Business Services, but also includes a global collection of players ranging from India to Canada to Denmark: WM Data AB, Danske Bank A/S, Dakish eServices, Rhodia SA, Logicalis, Systemcorp, AP Moller Maersk and Candle.

It's not that these deals are particularly large (especially by IBM strandards), but they're many. One gets the impression that Big Blue is poking into a lot of niches, using the acquisitions as intelligence outposts in the emerging BPO industry to guide later decisions on where to come down hard.

Donniel Schulman of IBM’s Business Consulting Services unit says of the Equitant deal, "This is fitting in very similarly with other acquisitions we've made in the business outsourcing space.”

Regarding IBM’s appetite for continuing down this path, he says "The outsourcing market is growing so quickly that, in order to keep up, we are always looking for new things in this area."

Bottom line: as IBM continues its apparently inexorable push into services, a battle of the giants loom. Expect entrenched outsourcing giants like Tata, Infosys and Wipro to ramp up global M&A activity as well, and for outsourcing customers to enjoy increasingly competitive rates.

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