Alorica Acquires West's Agent Services Businesses
Alorica, a provider of customer management outsourcing, late yesterday signed an agreement to acquire several of West's agent services businesses for $275 million. In 2014, these West businesses represented approximately $580 million in revenue.
The acquisition broadens Alorica's product offerings and market reach, enhances the company's delivery capabilities, and allows Alorica to continue its sustained, aggressive growth. Alorica now projects $1.2 billion in revenue in 2015.
West, in many analysts' opinions, was on its way to becoming a top-tier outsourcer. "Good numbers and a good reputation place West in the top tier," says Ian Jacobs, an analyst at Forrester Research. Jacobs also cites West for "great recruiting and great connections to the product side of the house."
"West is one of the pioneers and most successful players in the [business process outsourcing] industry," added Andy Lee, CEO of Alorica, in a statement. "Today's acquisition strengthens Alorica's market position, allows us to scale faster, and expands our reach into new vertical markets. By combining the strengths of both companies, we will be able to deliver immediate value to our customers."
The strategic acquisition strengthens Alorica's geographical presence. West's agent services business includes 1,500 nearshore employees in Jamaica and Mexico, 5,400 offshore employees in the Philippines, and 18,400 U.S. employees, bringing Alorica's employee head count to 48,000 employees. More than 5,000 of West's U.S. employees work as part of the West at Home service.
The home-based agent pool is a significant addition for Alorica, according to Peter Ryan, principal analyst for IT services at Ovum. "The onboarding of 5,000 home-based agents is an excellent base from which to attack the virtual contact center market in the U.S. Not only does the U.S. account for more than 90 percent of the global home agent market, but it is also forecast to grow in excess of 15 percent annually and is rapidly gaining interest from nontraditional adopters of home-based services," he says. "If Alorica succeeds at seamlessly incorporating West's home agents into their own offering, a new virtual CRM power player will be the result."
With the acquisition, West also gains a foothold in several new vertical markets, including healthcare, utilities, and government, while strengthening its existing position in communications, retail, travel, financial services, and consumer products. The deal also expands Alorica's current service offerings in customer care, technical support, and sales, and adds receivables management and direct response capabilities.
"Alorica and West share a passion and track record for excellent performance and possess unparalleled industry knowledge," Lee said. "This acquisition is the next step in our strategic vision to grow Alorica to become the number one BPO provider in our addressable markets."
It's not an unreachable goal, according to Ryan. "Alorica has increased in its prominence among the contact center outsourcing vendors in North America over the past two years," he says, and its acquisition of West "will mean even more positive exposure."
By increasing its revenue projections to $1.2 billion, the acquisition elevates Alorica greatly, Ryan adds. "In sheer magnitude, this should not be discounted. It positions Alorica at level pegging with other U.S. leading vendors."