IBM acquires BPO player


2 Feb 2005

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Business process outsourcing (BPO) firm Equitant, which employs 160 people at a facility in Ballycoolin, Dublin, is to be bought out by IBM for an undisclosed sum. The announcement was made by both companies in Dublin this morning.

Speaking to siliconrepublic.com, Donniel Schulman, vice-president of global finance and administration, business transformation outsourcing at IBM Business Consulting Services, described the deal as a “strategic acquisition that signals IBM’s commitment to the BPO area”.
As well as its Dublin operation, Equitant has offices in North America and a client list in the fast-growing BPO market that includes Microsoft and Lucent.

Schulman said that not only were the jobs of all 200 Equitant employees secure but he envisaged potential growth in employee numbers in the combined IBM/Equitant BPO business.

Equitant manages its customers’ order-to-cash cycle, which includes all financial processes associated with receiving an order for a product or service, through to receiving payment.
IBM said the acquisition would expand its capabilities in finance and administration services and enable it to meet growing client demand for improved performance and greater benefits in the area of order-to-cash processing. IBM plans to integrate Equitant’s services with its own consulting and managed services offerings.

IBM uses the term business transformation outsourcing or BTO to describe its BPO services, to emphasise the long-lasting changes and benefits it can bring to a client company’s operations.
Schulman claimed that cost efficiencies of between 40 and 50pc were being made by companies that outsourced their processes to IBM.

“BTO changes the value proposition for clients,” he explained. “It provides an enhanced set of tools where the client and its customers experience much fewer errors, and the confusion that can happen in the world of business-to-business is eliminated. It brings benefits of greatly improved working capital and increased productivity both on the customer and the end-user sides.”
Irish-born Paul French, founder and co-chairman of Equitant, described the deal as “a very good day for our company,” adding that it provided “a foundation for greater global reach in this high-growth business segment”.

Equitant is majority owned by Accretive Technology Partners, a private investment firm focused on the BPO area.

The transaction, which is subject to regulatory approval, is expected to close in March. Financial terms were not disclosed at Equitant’s request.

By Brian Skelly