PwC sells business process outsourcing unit

PricewaterhouseCoopers (PwC) sold its international business process outsourcing (BPO) operations to Exult Inc., a company that provides human resources (HR) services, for US$17 million in cash, Exult announced this week.

Exult, based in Irvine, Calif., says this deal will enable the company to offer a wider breadth of services and expand its global footprint.

“I’m very excited about the total capability and geographic presence that Exult now has,” said Kevin Campbell, president and chief operating officer of Exult.

Exult will add to its HR BPO offerings with more accounts receivable, general ledger and finance, accounts processing, and fixed assets and procurement tools including e-procurement, said Jim Madden, founder, chairman and chief executive officer of Exult during a conference call on Tuesday. Exult will also expand its accounts payable offerings.

Further intellectual property and capabilities acquired by Exult include BPO tools, message procedures and domain names such as, Madden said.

In an effort to make the transition smooth for its former clients, PwC will be transferring 500 of its employees to Exult including the client managers of transferred existing accounts. Included in this group are multilingual professionals with cross border finance and accounting skills and years of BPO experience.

The deal boosts the number of Exult’s blue chip clients to 15, with the company taking on six of PwC’s contracts with time left ranging from two to six years. These include Standard Chartered Bank, Equifax in the U.K., Safeway in the U.K., Tibbet & Britten, Grupo Algar, and a major unnamed airline. Total scheduled revenue from the remaining terms of these contracts is about US$100 million, Exult said.

This acquisition expands Exult’s global footprint to Hong Kong, Singapore, the Netherlands, Poland, India and Brazil.

“Our target market has increased dramatically,” Madden said. “We believe we can now target and support multinational companies in North America, Europe, Latin America, and Asia.”

As a result of the deal Exult now employs about 2,000 people worldwide with more than 50 per cent of them outside North America, and serves over half a million employees of clients, Madden said.

It will also add two client service centres, one in South Shields, England, and another in Uberlandia, Brazil. It already has centres in Memphis, Tenn.; Houston; Charlotte, N.C., and Glasgow, Scotland, and has opened new centres in Toronto and Mumbai.

PwC also sold off its management consultancy business last year to IBM Corp. for US$3.5 billion. The deal was finalized in October.

According to a study by Gartner Inc., the worldwide BPO market will increase 10.5 per cent in 2003 to US$122 billion from US$110 billion in 2002. Gartner said that this moderate growth in 2002 and 2003 compared to double-digit growth for several years prior is a result of delays in contract signings and lower negotiated rates for BPO.

North America is forecast to make up 57 per cent or US$69 billion of the worldwide BPO market this year, with Western Europe forecast to grow 10.9 per cent to US$27 billion. The Asia-Pacific BPO market is expected to grow 7.8 per cent in 2003, to US$8.7 billion. However, Gartner expects growth in Western Europe and Asia/Pacific to overtake growth in the North American BPO market over the next few years.