Concentrix eyes acquisitions in India

At a time when the Indian IT services and business process management (BPM) is undergoing major transformation due to shift towards automation and cloud adoption, US-based BPO firm Concentrix is eyeing to acquire BPO firms in India. Chris Caldwell, president, Concentrix told Business Standard that the company will continue to look at acquiring targets in India and other regions as part of its growth strategy. "M&A is part of our growth strategy and we will look at targets in India and other geographies. India is an attractive market for us because of theaccess of talent and a lot of innovation is happening here," he added.

Concentrix, the BPO business of US-based SYNNEX, recently completed the acquisition of BPO firm Minacs. Concentrix brought the company for a total consideration of $420 million from PE players CX Partners and Capital Square Partners. The PE players had acquired Minacs from the Aditya Birla Group for $260 million in 2014. Minacs is the third acquisition that Conentrix has done in India.

Before this, they acquired the BPO business from IBM in 2013. Caldwell is also clear the company will not acquire firms in India to add head count but to fill in gaps that the firms lacks.

"Minacs gives us access to propriety technology in the market optimisation space and Internet of Things. We saw this as a value offering to our customers and is complementary to our core business. Going ahead when we look at M&A we will be focused on getting either vertical exposure or access to technology that allows us to differentiate. In India we will look at the startup ecosystem as well," said Caldwell.

With the acquisition of Minacs, Concentrix' headcount will go up to 90,000 globally with 125 delivery centres across six continents. The acquisition strengthens the company's position as a Top 10 global provider, provides greater scale and capabilities in a variety of industries and enhances its technology solutions and platforms. Caldwell shares that the impact of automation has started impacting the BPO business.

"Automation cannibalises our revenue by 8-12 per cent every year. However, we are focused on driving efficiencies and how we continue to grow above that by winning new business from those clients," said Caldwell. He is also of the opinion that automation is impacting headcount growth as well and those firms that focus only adding employees need to relook at their strategy.

"We have a very large electronic client and we automated their sales processes, and within six months we cut 70 per cent of the manual workforce as it was taken up by automation. So we can have a dramatic impact to client's businesses and something that we push heavily," he added.

Caldwell also cautioned that the Brexit will have impact for the company and the industry in general. "We are seeing demand pull down much more than what we had anticipated, especially in the UK. Though other markets like the US, APAC and emerging markets are doing well. What we are finding now is that clients are realising now what they want to do. We think the next 2-3 quarters will see impact due to Brexit. But in the long term I think there is opportunity as well," said Caldwell.