For the second year straight, January has yielded an aggressive acquisition play in the customer relationship management (CRM) outsourcing space, this year with the announcement that Alorica is buying West Corporation’s agent services. This places Alorica in a stronger competitive position and shows the emphasis that many outsourcers are placing on the North American contact center services market.
Over the past two years, Alorica has increased its prominence among contact center outsourcing vendors in North America. Recent moves involving new capacity in the Dominican Republic and Honduras have set the stage for its 2015 decision to buy West Corporation’s agent services division for US$275 million. This division yielded revenues of $580 million in 2014, and should bring Alorica’s 2015 turnover to roughly $1.2 billion (as per Alorica’s projections).
In sheer magnitude, this positions Alorica nearly level with other leading U.S. vendors such as TeleTech, Sykes, and Sitel, and will serve Alorica well when bidding for business among enterprises seeking vendors with solid revenues behind their name.
The acquisition of West Corporation’s agent services bulks up Alorica’s delivery platform in the Philippines and the American nearshore (with a rich nearshore English language opportunity via a beachhead in Jamaica). However, the onboarding of 5,000 home-based agents (about 27% of the total West US workforce) is an excellent base from which to target the virtual contact center market in the United States. Not only does the United States account for more than 90% of the global home agent market, but it is also forecast to grow in excess of 15% annually, and is rapidly gaining interest from non-traditional adopters of home-based services. If Alorica can seamlessly incorporate West’s home agents into its own offering, it will become a new virtual CRM power player.
Beyond the U.S. Market
Outsourcers and enterprises alike will take notice of Alorica’s decision to take on West’s agent services. However, Alorica executives will need to determine the extent to which they wish to remain focused on the U.S. market. At $1.2 billion in revenues, over the long term Alorica would be wise to look for new demand markets, such as Western Europe and ANZ (in the case of the latter, this is a great opportunity for Alorica’s enhanced delivery presence in the Philippines). This will diversify Alorica’s base of revenues and further position it as a global contact center competitor in the eyes of prospective clients.
NSAM is publishing this article with permission from the author