US-based private equity group KKR-owned HR software and services provider NorthgateArinso has acquired the HR management division of US based Convergys for $100 million. The firm will pay about $85 million at closing and another $15 million over three years. The acquisition includes the assets, customer portfolio and global delivery network of Convergys? HR management division. Convergys HR management division alone has global revenue run rate of about $250 million and services some major clients like Cadbury, Whirlpool and Shell from India. This takes the total value of the NorthgateArinso-Convergys entity to be around $900 million.
NorthgateArinso is one of three divisions of Northgate Information Solutions that has been primarily focusing on the UK and European markets. The deal would bring in 20 customers to the firm?s HR BPO customer base and majority of these clients come from the North America. The US market is over a third of the global HR outsourcing market, and North America is part of the delivery scope in the majority of HRO deals.
The firm said it has acquired Convergys in a bid to focus on the US and Asia Pacific region including the Indian market. Darcy Lalonde, executive president for Asia Pacific at NorthgateArinso, said, ?Largely, our intention is also to get a foothold in the US market where we were not present. At the same time, we wanted to have a presence in the Indian and Chinese markets, which Convergys has given us.? He added that the integration would take about six months. ?We plan to use NorthgateArinso as the brand name for the combined entity. With the completion of the deal, the Convergys brand will not be used for HR outsourcing activity in order to avoid brand confusion in view of Convergys? other activities focused around customer care,? Lalonde added.
NorthgateArinso would get about 3,500 people on board with this acquisition, taking the total headcount to 8,000 people and gain an access to 10 delivery centres based out of India, US, China, Malyasia and Brazil. NorthgateArinso says the buy would help the firm focus on for HR back-office services and would also bring in additional high-end enterprise HRO capabilities. The combined entity will have offices in 32 countries and deliver services through 19 main HR service centres covering the main time zones of the world. In India, NorthgateArinso would acquire the two Convergys facilities at Bangalore and Hyderabad, together employing 500 people, taking the total strength of the firm to 1000 people in India. Sathia Aravamudhan, country manager, India, NorthgateArinso said, ?The acquisition would help the firm target the Indian market also. We are looking at large enterprises with more than 1,000 employees across industries.?