Firstsource Acquires U.S. Mortgage Outsourcing Service Provider

Indian outsourcing firm Firstsource Solutions has purchased mortgage and BPO units of U.S.-based ISG Novasoft Technologies in an apparent hunt for outsourcing contracts in America’s lucrative mortgage-services industry.
As a part of the deal, about 700 employees of ISGN Solutions in the United States and India will join Firstsource. ISGN Solutions has offices in PalmBay, Florida; Rocky Hill, Connecticut; and Bangalore, India. Firstsource has not disclosed financial details of the deal, but VCCircle estimates the outsourcer might have shelled out around $13 million for the two units.
Declining profits margins have reportedly caused ISG Novasoft to sell its BPO unit. The U.S. company’s revenue has fallen by more than half in the last three years. It posted revenue of just $25.9 million for 2014, compared with $55.3 million the year before and $60.7 million in 2012.
The Mumbai-based firm says the acquisition helps it cross-sell some of its offerings and explore the U.S. mortgage market to leverage its global relationships. For decades, healthcare has been the main business vertical for Firstsource, although the outsourcer caters to several clients in telecom, insurance, and banking sectors as well.
Firstsource employs about 3000 people and runs delivery centers in India, the Philippines, Sri Lanka, the United States, Ireland, and the United Kingdom.
Unlike its domestic peers, Firstsource’s business expansion slowed a bit after it acquired two healthcare BPO firms in the United States in late 2007 But a turnaround came when it was acquired by the deep-pocketed RPG Group in 2012.
Last year, it launched two delivery centers in the United States, expanded operations to Sri Lanka and acquired a Bangalore-based analytics company NanoBi.
“The acquisition marks Firstsource’s penetration into the growing U.S. mortgage BPO market,” said Sanjiv Goenka, chairman of Firstsource. “ISGN’s deep knowledge in the mortgage-outsourcing space, coupled with a set of marquee customers, provides us with significant opportunities to cross-sell capabilities and leverage our global relationships.”