When it comes to the customer management outsourcing solutions business the names may not be familiar to those outside of the market in terms of headline visibility. However, this is a big and growing global business, and a large U.S.-based Business Process Outsourcing (BPO) company, Alorica, has just gotten bigger with its agreement to acquire several of West Corporation’s agent services businesses for a consideration of $275 million.
Alocrica , headquartered in Irvine, CA, for those unfamiliar with the company has more than 48,000 employees in 40 domestic, near shore, and offshore customer management centers. The company in making the announcement said that in 2014, the businesses being acquired represented approximately $580 million in revenue. It further stated that the new Alorica will now be one of the largest U.S. based BPO providers with projects estimated at $1.2 billion in revenue in 2015.
“West, is one of the pioneers and most successful players in the BPO industry,” said Andy Lee, CEO, Alorica. “Today’s acquisition strengthens Alorica’s market position, allows us to scale faster and expands our reach into new vertical markets. By combining the strengths of both companies, we will be able to deliver immediate value to our customers.”
West’s agent services businesses provide large-scale customer contact solutions to a wide range of vertical markets. ALorica says the acquisition strengthens its market position in three key areas:
Global footprint: increases the company’s geographical presence in the U.S., Latin America and the Philippines, while adding a market-leading work-at-home capability.
Markets: Enters Alorica into new markets, including healthcare, utilities and government, while strengthening Alorica’s position in communications, retail, travel, financial services and consumer products.
Services: Expands current services offerings in customer care, technical support and sales, and adds receivables management and direct response capabilities.
Big is the operative word for this acquisition. The integration of West’s agent services businesses’ workforce will add an additional 1,500 nearshore employees (Jamaica and Mexico), 5,400 offshore employees (Philippines) and 18,400 domestic employees, bringing Alorica’s employee headcount to 48,000 employees. And, in what is reflective of the fact that BPO can thrive not just in low-cost labor markets but also in the US, over 5,000 of the 18,400 domestic employees work as part of the award-winning West at Home service which was one of the first work-at-home solutions. In fact, Alorica is going to utilize West’s proprietary work force management system, Spectrum™ as a core component of Alorica’s work-at-home service offering.
“Alorica and West share a passion and track record for excellent performance and possess unparalleled industry knowledge,” continued Lee. “This acquisition is the next step in our strategic vision to grow Alorica to become the number one BPO provider in our addressable markets.”
“Alorica is committed to supporting West agent services customers and employees going forward,” said Tom Barker, chairman and CEO, West Corporation. “Our company cultures and technologies are complementary, and we will work closely together to ensure a smooth transition.”
Peter Ryan, Principal Analyst, IT Services at Ovum, in comments about the acquisition observed that:L that: “Alorica has increased in its prominence among the contact center outsourcing vendors in North America over the past two years and its decision to buy the agent services division of West Corporation for $275m will mean even more positive exposure….In sheer magnitude, this should not be discounted, in that it positions Alorica at level pegging with other US leading vendors.
He continued, “In Ovum’s view the onboarding of 5,000 home-based agents is an excellent base from which to attack the virtual contact center market in the US. Not only does the US account for more than 90 percent of the global home agent market but it is also forecast to grow in excess of 15 percent annually and is rapidly gaining interest from non-traditional adopters of home-based services. If Alorica succeeds at seamlessly incorporating West’s home agents into their own offering, a new virtual CRM power player will be the result.”
As the acquisition highlights BPO industry consolidation is a trend to watch in 2015. It also shines a light on the fact that BPO is not just about large physical contact centers. Indeed, in an industry with high employee churn rates and a challenge of attracting and keeping quality agents, the work-at-home component of this deal cannot be under-estimated, especially here in the U.S. where companies understand the value of work-at-home customer interactions professionals.