IBM is often an innovator in the markets it sets out to dominate. So the news that it is now disposing of its global customer services BPO business to US-based IT distributor and BPO player SYNNEX, points to a major shift in in how IBM intends to deliver business process services (BPS) in the future. It could also have significant implications for the broader BPS market and suppliers.
IBM is selling its global network of approx. 35 customer service centres to SYNNEX for $505m, which includes $430m in cash and $75m in SYNNEX shares. The deal also sees IBM enter into a multi-year BPO agreement with Concentrix, SYNNEX’s customer services BPO operation to deliver these services on behalf of IBM. The capabilities transferring to SYNNEX include customer care, as well as front and back office administration for life, annuity and health insurance.
The deal will turn Concentrix into a global customer services BPO player with 45,000 staff, 50+ delivery centres and 300+ clients, supporting 40 languages. It will compete head-on with other global customer service players like Sitel, Teleperformance, Sykes and in the UK increasingly against Capita and Serco, which have both been expanding their customer service capabilities for the domestic market.
Why is IBM making this strategic move? It has been clear for a while now that IBM sees customer services as non-core and at an increasingly commodity end of BPS. Social, mobile, analytics & cloud (SMAC) are transforming this space, but IBM wants to support clients through this customer experience transformation, rather than delivering the actual operations.
This isn’t notice that IBM is moving out of BPO. It said it will continue delivering and investing in finance and administration, procurement and supply chain management, human resources and Smarter Workforce, and mortgage origination and servicing. The aim is to better exploit its investments in software and platforms and align them more closely with BPO – something that arch-rival Accenture has been doing successfully for some time now. Recent IBM investments include Kenexa for a Smarter Workforce in August 2012 (see here) and Emptoris for supply chain management in December 2011 (see here).
We will have much more to say on the implications for IBM, the market and its competitors, for subscribers in UKHotViewsExtra later.