The acquisition, on which no financial details were released, is another in a series of recent acquisitions in the BPO space. Other recent deals include Webhelp’s acquisition of OneLink and the major acquisition of Sykes Enterprises by Sitel Group, two North American heavyweights.
Yoni Epstein, CEO of itel, told Nearshore Americas that the synergies between itel and Emerge provided a solid basis for partnership while enabling the Jamaican company to pursue its intentions for expansion into further reaches of Latin America.
“Fundamentally, we saw in Emerge a great deal of ourselves five years back,” explained Epstein. “That is, it is a young company with great talent, a strong talent base and a desire to expand. We felt that itel, and the way we have built our machinery from a sales perspective, could enhance what Emerge already has.”
Business Continuity Provisions
Epstein’s belief in the Nearshore as the future of CX, contact center and BPO services, particularly in the wake of the Covid-19 pandemic, was another driver in the acquisition of Emerge, a privately held company founded in 2008 by husband-and-wife team Adrian Collins and Carole Fletcher.
The need for major global companies to diversity outside of BPO markets in Asia, including the Philippines, which was highly criticized over its slow move to work from home during the pandemic, meant entering markets like Guyana and Honduras would help itel provide a competitive price point in the region.
“Guyana and Honduras were always on our list of where we would look to acquire,” said Epstein. “itel believes that Latin American needs a market providing true labor arbitrage, similar to the way that countries like India, Malaysia and the Philippines act in Asia.”
“We wanted somewhere that had the experience but wasn’t outplayed, and we felt Honduras gave us that” — Yoni Epstein
With a population of around 783,000 in 2019, Guyana does not provide the talent pool and scaling options of other regional countries, nor of a Tier 1 city in the Philippines, but advantages including the English-speaking population, a strong literacy rate and sharing its timezone with the US East Coast all provide a sound value proposition. The labor arbitrage that Guyana offers extends that play, said Epstein.
Similarly, Honduras is a safe BPO market, split mainly between its two major cities, Tegucigalpa and San Pedro Sula. It also has the largest number of bilingual schools in Central America and a young talent pool, culturally connected with the US. Yet it is not as “outplayed” as some of its regional neighbours, Epstein said.
“Honduras, like many Latin American nations, has a great history of providing high-tier services. It is also not as outplayed as El Salvador or Guatemala in the Central American market, nor Mexico or Colombia. We wanted somewhere that had the experience but wasn’t outplayed, and we felt Honduras gave us that,” he said.
Opportunities in New Markets
The acquisition will see Emerge BPO’s 700-strong headcount in Guyana and Honduras – as well as a handful of US-based at-home workers — merged into itel’s current employee pool, bringing the company’s employee number up to some 4,500 in total.
For Epstein, the addition of the Emerge facility in Guyana’s capital, George Town, offers a major asset to increase the company’s headcount further as it continues to push towards its ‘Big Hairy Audacious Goal’ (BHAG) of 11,000 employees by 2025.
“The Guyana facility gives us the greatest potential. It’s in the heart of George Town and is an 84,000 square foot building. There are seven stories but at the moment only three are used. We can expand there, and fill an extra 1,500 seats, adding additional jobs to the local economy,” he said.
The two companies have been collaborating in the weeks prior to the announcement on due diligence processes and planning for the immediate future. In the immediate future, a process of meetings, first between the managers of each side and then a Town Hall for all team members, will take place as Emerge aligns itself with itel’s vision, said Epstein.
“Acquisitions are all based upon getting us into new geographies, attacking a new technology play or getting into verticals we’re not in today” — Yoni Epstein
“The integration will probably take between 30 to 60 days from a formal and operational standpoint. We will then make decisions on what type of investments we’re going to make into the facility within the first 90 days, to raise the facility’s profile and make sure it looks and feels like a typical itel facility,” said Epstein.
The company structure will remain largely in place with Emerge managing its clients day-to-day, Epstein explained: “The management team won’t change but they’ll be immersed in itel’s culture and style of business. HR, Workforce, Quality and Training departments will work from a group-like perspective whereas Operations will report to our Chief Experience Officer. Emerge will still have its Senior VP on the ground managing accounts and there’ll be some dotted line management oversights for our different verticals.”
Future Acquisition Prospects
The company will continue to pursue its BHAG by 2025 by chasing down new clients to expand the verticals it operates within. The company grew by 40% during the pandemic and will pursue expansion with future acquisition opportunities, Epstein noted.
“Acquisitions are all based upon getting us into new geographies, attacking a new technology play or getting into verticals we’re not in today. To achieve our BHAG we have to be diversified throughout the Latin American region,” he said.