Indian IT Outsourcing Gets Stronger and Bigger And…
Indian BPO Genpact is buying U.S.-based Headstrong in a half-a-billion dollar deal.
Not too long ago, I wrote about U.S.-based iGate Corp. buying India’s Patni Computer Systems Ltd. in a deal valued at $1.22 billion (check out that story here). That news came on heels of a blog I wrote highlighting some interesting 2011 IT outsourcing predictions from various pundits that foretold “cross-pollination” between Indian and Western firms via mergers and acquisitions (see that blog here).
Well, news hit the wires this week about another cross-pollination. This time, however, India’s largest business process outsourcing (BPO) firm Genpact Limited is acquiring Headstrong Corp., an IT consulting and services provider headquartered in Fairfax, Va., for $550 million. Headstrong is a U.S. company, but operates around the world with offices in Boston, Chicago, Dallas, New York City, Salem, Silicon Valley, Washington, D.C., Frankfurt, London, Hong Kong, Tokyo, and Singapore.
Headstrong has offshore delivery centers – in India (Bangalore, Hyderabad, and Noida) and one in Manila in the Philippines – as well as nearshore delivery centers. It has about 3,700 employees and a strong focus on the capital markets sector. Its client roster, according to a press release issued by the two companies, includes nine of the world’s top 10 investment banks and three of the top five asset managers. In 2010, Headstrong generated revenues of about $217 million, and Genpact says it expects Headstrong’s long-term growth rate to be in excess of 20% per year.
Headstrong offers a variety of services, including business consulting, product and business platform development, application development and maintenance, platform implementation services, quality assurance, and production support. Technology services, according to a fact sheet on Headstrong’s Web site, make up about half of its revenue. Among the high-tech and IT vendors it has partnerships with are IBM, Sybase, Microsoft, and Informatica, among others.
This is not Genpact’s first U.S. acquisition. Last year, it acquired Symphony Marketing Solutions in 2010, a provider of analytics and data management services with expertise in the retail, pharmaceutical and consumer packaged goods industries. In 2006, Genpact bought mortgage firm Money Line Lending Services.
Now, this acquisition is different from the iGate and Patni deal. There you had a U.S.-based company (albeit with most of its software development centers in India) buying a bigger, Indian outsourcing firm. Experts at the time said iGate bought Patni to stay competitive – it felt the need to get bigger and build out its breadth of offerings.
My guess is that as the dust settles, iGate will look more and more like an Indian outsourcing company even though it is based in Fremont, Calif. I mean, iGate already looked a lot like an Indian firm, even before swallowing a bigger Indian firm. To wit: it has four delivery centers in India (Bangalore, Chennai, Hyderabad, and Noida) and one Australia and one Mexico. It ranked third in Dataquest-IDC's annual survey of the top 20 best IT employers in India last year (this was before buying Patni). I’m not saying this is all bad, I’m simply saying.
The Genpact and Headstrong deal seems like a classic BPO expansion. Now that Headstrong – which already had strong ties to India – is owned by a big Indian BPO, well… you get my
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