Global consulting firm Capgemini (which maintains an expanding base of operations in Latin America) is boosting its core Finance and Accounting Business Process Outsourcing (BPO) capabilities with the purchase of the order-to-cash (OTC) business of US-based financial outsourcing delivery provider Vengroff, Williams & Associates(VWA). Finance and accounting is the main driver of Capgemini’s BPO business, generating more than 60% of its revenue last year.
OTC Market Expected to Reach $31B
Explaining Capgemini’s rationale for the acquisition, Chris Stancombe, head of global FAO, cited an estimate from Nelson Hall consultants that global OTC and collections BPO market size is expected to reach $31 billion USD by 2012 and is growing by more than 10% per annum. “In the current business climate, clients are giving more focus to their cash and credit management controls,” said Stancombe. “We feel that clients will be well served by the combined operations.”
Capgemini Sees Complement to Existing BPO Business
Capgemini sees VWA’s OTC capabilities and technology as a complement to its existing BPO business. “The acquisition brings more than 300 experts to the Capgemini organization and will be accretive to the BPO unit margin as well as to the overall group margin, supporting its goal to boost profitable growth from value-added services,” Stancombe said.
“Through the move, Capgemini will acquire a significant minority shareholding in OTC Pro LLC, the Vengroff, Williams & Associates’ company that owns the WebCollect software, and gain enhanced access to the O2CPRO platform which is already being integrated into its BPO F&A services. VWA will gain access to the scale and global reach that Capgemini provides.”
Bob Williams, Chairman and CEO of VWA, also sees complementary results from this acquisition. “The integration of VWA’s O2C business into the Capgemini BPO organization will enable both VWA and Capgemini’s customers to have one partner for best in class services,” he said. “VWA’s clients and Capgemini’s clients will receive tremendous scale of value from this acquisition. VWA stands out in the O2C arena through vigorous technological innovation in accounts receivables processes, promoting our ability to offer operational efficiencies alongside improved ROI. With VWA and Capgemini operating as one organization, we expect customers and partners will benefit from not only the expanded solutions portfolio available to them, but also from a strong global network of service and support resources.”
Customers Can Plug Leaks
For customers, Stancombe says F&A BPO helps clients reduce revenue leakage, accelerate the cash-flow cycle and limit bad debt expense. “These are outcomes that clients are increasingly demanding,” he said. “Revenue leakage from cash collections can account for up to 5% in some firms, according to IDC. Through the acquisition, Capgemini will be ideally positioned to address these customer needs.”
The transaction is financed by the Capgemini Group’s net cash and has just been finalized. Financial terms were not disclosed. Capgemini BPO has already integrated Webcollect O2CPro software into its BPO F&A offering and anticipates that this subsidiary will continue to be run as an independent entity and that the software will continue to be licensed to clients and other service providers.