IBM Sells Customer Services Unit to Synnex for $505 Million

IBM (IBM) has sold off its worldwide customer care business process outsourcing services unit (CRM BPO) to Synnex (SNX) for $505 million, in a transaction the distributor said will immediately make its Concentrix business services subsidiary a “global Top 10 player in a growing market.”

Under terms of the deal, Synnex will pay IBM $430 million in cash and another $75 million in its stock. Synnex said the transaction will add about $120 million in pre-tax earnings and 55 cents in fully diluted per-share earnings, not including costs associated with integrating the IBM unit in the next year.

Synnex plans to fold the IBM customer care services business into its Concentrix subsidiary, ballooning the group to some 45,000 workers from 8,000 employees, 50 delivery centers on six continents and a roster of some 300 customers. Tied to the acquisition is a side agreement between the two companies under which Concentrix will become an IBM strategic business partner for global customer care business process outsourcing services. In other words, IBM agreed to shuffle business to Concentrix.

“This acquisition will make Concentrix a global Top 10 player in a growing market,” said Kevin Murai, Synnex president and chief executive. “With our collective strengths in the CRM BPO market, this strategic acquisition will create an even more compelling value proposition for our clients and shareholders.”

Synnex’s Concentrix unit specializes in customer care services, including call centers and tailored processing for banks, insurers and healthcare organizations. Acquiring the IBM business will enable Concentrix to expand its reach to some 12 industries, the company said.

“We have long been committed to delivering high-quality, innovative CRM BPO services and this acquisition will significantly extend our portfolio and our delivery capabilities,” said Chris Caldwell, Concentrix president.

IBM suggested it had outgrown the operations end of its customer care business and preferred to focus on the technology underlying the services. The vendor called attention to its recent acquisitions of Kenexa and Emptoris as examples of its strategy to deliver better analytics-based solutions to its customers and said it will invest in solutions in the BPO services market in finance and administration, procurement and supply chain management, human resources and Smarter Workforce, and mortgage origination and servicing.

The partnership with Synnex essentially gives IBM an operations manager for its customer care services solutions while supplying the distributor with an expanded portfolio, customers and geographic reach.

“This acquisition by Synnex further enhances our mutual commitment to client satisfaction through one of the world’s top customer experience BPO providers,” said Lori Steele, IBM Global Process Services general manager.