IBM sells customer care outsourcing unit for $505 million

IBM sheds its customer care outsourcing unit for higher-profit business opportunities

Citing low profit margins, IBM has sold its customer care outsourcing business to Synnex for US$505 million, the companies said Tuesday.

Synnex will combine the IBM business with its wholly owned subsidiary Concentrix, which operates in a similar field. Synnex will pay approximately $430 million in cash and $75 million in stock for the IBM business.

"One of the most exciting things about this acquisition is being able to broaden our knowledge and vertical industry depth by the talent that is coming across from IBM," Concentrix President Chris Caldwell said in a teleconference.

IBM spun off the business unit as part of a long-running effort to shift its focus to areas in which it would make larger profit margins. It follows its divestiture of other relatively low-margin businesses, such as PCs, hard drives and point of sale (PoS) systems.

"This agreement is good for IBM as it furthers our focus on growing our software and cloud-based CRM [customer relationship management] solutions as part of [our] continuing shift to high value and innovative spaces," said Lori Steele, general manager of IBM Global Process Services.

Despite the sale, IBM says it will remain in the field of business process outsourcing (BPO), in which it runs entire business functions for some customers.

To that end, in 2012 IBM purchased Kenexa for $1.3 billion to strengthen its human resources business process services. And a year earlier it bought Emptoris to boost its portfolio in supply chain management services.

IBM will still have a foot in the customer care market as well, by selling software, consulting and other services that employ analysis software to personalize customer care.

Concentrix will become an IBM business partner and the companies will pursue business opportunities together, they said.

Concentrix runs customer care call centers on behalf of businesses such as banks, insurance firms and health care companies. It also provides front and back office services for retail stores and banks, and processes claims for insurance companies.

The IBM deal should bring it greater economies of scale, Caldwell said. With the acquisition, Synnex expects Concentrix to become one of the 10 top providers of CRM BPO services, a market that generates more than $55 billion in work annually, according to Synnex.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

Join the PC World newsletter!

Error: Please check your email address.

Tags business issuesIBMMergers and acquisitions

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Joab Jackson

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?