Country focus

Ireland

Ireland’s position as a low tax, business friendly, open economy with a highly skilled workforce has underpinned domestic and foreign investment in the growing BPO and outsourced customer service industry. The Irish market has seen the development of numerous large scale national and international operations in regional locations, where operators can capitalise on a lower cost base in comparison to the greater Dublin region. The BPO industry in Ireland is estimated1 to be worth approximately €1bn and is forecast to grow at a CAGR of 5% for the next number of years.

Recent deals include Capita’s acquisition of SouthWestern Business Process Services from Ion Equity and private equity group Carlyle Cardinal acquiring Abtran, one of Ireland’s largest providers of customer and business process management services.

Spain

Motivation for Spanish companies to outsource certain services has changed in recent years with clients increasingly valuing the importance of outsourcing as a lever of change and company transformation.

Cost reduction continues to be an important consideration for companies but it has lost ground against other factors such as productivity, innovation and quality in change management, in line with the broader global market.

In general, non-financial factors have gained importance, indicating that the market has reached a level of maturity and that suppliers have achieved a higher level of confidence in their ability to support growth and contribute to business transformation.

UK

The UK is one of the most mature markets for outsourced services. Despite the relative high cost base, vendors are attracted to the market because it offers a highly trained workforce, a supportive government, high levels of service and a geography which can often be used as a gateway to mainland Europe.

Furthermore, UK clients are increasingly demanding a local service where the culture and ethos match their values. This has resulted in a number of large corporates reshoring captive call centres, but has also stimulated high levels of M&A activity with large international players acquiring a UK-based platform or building sector specific solutions.

Most recently, Japan-based Outsourcing Inc. purchased Liberata, a provider of BPO and on-demand, digital and transaction services to the public sector. This deal followed that of Indian IT services group Tech Mahindra, which purchased Target Group, a UK BPO and software provider to financial institutions, for an enterprise value of €130m.

Portugal

The €510m call centre market has been growing by over 10% per year2, in contrast to the unfavourable economic conditions in Portugal in recent years. The sector’s growth is fuelled by the customer support segment (62% of the market), followed by sales services (21%), technical support services (7.5%) and collection management services (7%). The financial and telecoms industries are the main clients in the sector, although other business sectors are gaining in importance.

Portugal is considered one of the top nearshore destinations for IT services and international call centres. Lower labour costs relative to other European countries, high education levels, multilingual skills, and the cultural proximity with the rest of Europe and other countries (such as Portuguese-speaking countries like Brazil) create a strong base for the development of nearshoring services.

India

The Indian outsourced customer services and support industry is expected to surpass €10bn in 2016. Leading players are increasingly providing high value services involving customer analytics and are becoming strategic partners for clients. In particular, vertical models are replacing horizontal service driven models, and companies are focusing on offering multichannel services via mobile and chat facilities to retain customer loyalty and stay profitable.

Capability augmentation is leading to consolidation in the space with both private equity houses and large strategic players making significant acquisitions. For instance, Synnex Corporation acquired Minacs BPO for €376m to expand its digital capabilities and strengthen its footprint in the fast growing tier two and three Indian cities. Another deal saw Blackstone buy back Intelenet Global Services for €345m.

1 Capita Annual Report 2014
2 Informa DBK

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