2010’s Last-Minute Outsourcing Deals, Acquisitions and Expansions

By Audrey B.

The year 2010 is almost at an end and prospects for the outsourcing industry still remain strong, especially in sectors such as IT and healthcare -- specifically, medical billing outsourcing and medical coding outsourcing. In preparation for the year-end and the coming year, many companies have been finalizing end-of-year deals, closing acquisitions, and pushing through expansion plans in a rush to end 2010 right, as well as start 2011 in better shape.

Just this past week, several notable contracts have been signed, including the $1.4 billion outsourcing contract awarded on Dec. 15 by German utilities company E.ON (EONGY.PK) to Hewlett-Packard (HPQ). HP will be providing infrastructure-technology outsourcing services to E.ON where it will be managing E.ON’s data center and workplace services. On the same day, E.ON also closed another outsourcing contract with Deutsche Telekom’s (DTEGY.PK) business-customer unit T-Systems, for the management of international speech and data communications. The agreement is slated to run for five to seven years at a reported €1 billion.

Meanwhile, business process outsourcing provider Firstsource Solutions signed a Dec.20 agreement with IP infrastructure and service solutions provider GENBAND to provide it with customer service and other related operations beginning in January.

Several acquisitions were also announced this week, most notably three outsourcing-related acquisitions that were all announced on Dec. 20. These include an acquisition by outsourcing marketplace provider Freelancer.com of LimeExchange.com of Lime Labs LLC. Freelancer.com will be migrating all of LimeExchange’s two million users onto the Freelancer.com platform.

Also of note is Towers Watson’s (TW) plan to acquire Aliquant, a health and welfare benefits administration firm. According to Pat Amendola, North American leader of Towers Watson’s technology and administration solutions, “This agreement strengthens Towers Watson’s position as a premier provider of health and welfare outsourcing, and provides greater economies of scale to help us maintain our service quality while supporting our longer-term growth goals.”

Last but not least is CSC’s (CSC) announcement that it has acquired Virginia-based IT systems and services company, CenTauri Solutions. “With the addition of CenTauri Solutions, CSC strengthens our capabilities in providing IT services and systems integration solutions that deliver value to the Defense Intelligence Agency and C4ISR customers,” said James W. Sheaffer, president of CSC’s North American public sector line of business.

Outsourcing company EXLService (EXLS) announced the official inauguration of its new global delivery center in Noida, India, which marks the first phase of its expansion plans in the locality. The expansion is slated to expand EXL’s workforce in the country by as many as 2,200. Work in the center is slated to begin immediately, with services slated towards new client acquisitions as well as the expansion of existing client operations.

With the year almost concluded and a fresh one set to start, it will be interesting to see how the outsourcing industry will fare once again. With rumors persisting about a second dip in the market, and the precarious ongoing recovery from the global downturn, the outsourcing climate could still go either way. But taking into account that outlook has largely remained positive, and even Accenture’s (ACN) better-than-expected first quarter fiscal results for 2011, it’s easier to envision a promising future ahead for outsourcing in 2011.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.