EXL eyes the enterprise BPO market with acquisition of OPI and the world’s second-most intelligent people


EXL: Fine wines, fine insurance and now some very smart Bulgarians

EXL and OPI, two of the smaller Finance and Accounting BPO (F&A BPO) providers, and both recently touted as acquisition candidates in HfS Research’s 2011 F&A BPO market landscape, have tied the knot in a surprising merger, in this rapidly-consolidating and transmutating BPO market. Not only that, HfS has officially uncovered the undisputed proven fact that Bulgaria is home to the world’s second-most intelligent people, according to MENSA’s IQ scores.  Yes, EXL now has an operation there.

Already this year, we have seen bold moves from HOVS to acquire SourceCorp and Genpact with Headstrong.  It appears that the leading “pureplays” (whom we won’t be calling pureplays anymore) are seeking to bolster their scale, service portfolio and industry competency, while several of the larger IT-centric outsourcers watch curiously from the sidelines as their BPO heads anxiously try to convince their boards of tech-lovers that offshore IT services growth isn’t infinite, and if they don’t invest in their BPO competencies soon, will face a very tough task to infiltrate this market in the future.

I have long-admired EXL as a business, since the early days of its IPO – its clients are like a who’s who of insurance giants. EXL  has focused expertise in complex areas of insurance, namely risk management, analytics and compliance, in addition to transactional process.  It has also been quietly developing its excellent LifePRO platform for or life, health and annuity insurance.

Here’s why this is an excellent acquisition:

EXL has struggled to broaden its client portfolio outside of the insurance sector. OPI brings a host of clients from the services and manufacturing industries.

OPI brings some sales chops to the party that EXL has sorely lacked.  While EXL has developed an excellent reputation in niche circles within insurance and BPO, is has struggled to develop an aggressive sales organization, anywhere near comparable with the likes of Genpact, of even WNS. OPI has punched above its weight over the years, largely thanks to an excellent sales organization, which includes some former KPMG partners who came across with the formation of the firm, bringing with them a strong CFO network.  OPI also has sales offices in Dallas, Houston, Atlanta, Chicago, LA, New York and DC.  If EXL can retain this talent, it has a ready-made front-end to get itself into larger deal discussions.  One little-known fact about EXL is the it has one of California’s finest winery tycoons on its board, which will be a strategic bonus when attempting to convince OPI’s management to put off retirement for a couple more years…

OPI adds to EXL’s European and India delivery competency. OPI has a small, but not insignificant, 440-seat operation in Sofia, Bulgaria, that adds to EXL’s existing European center in the Czech Republic, which was formerly Schneider Logistics’ captive operation. Bulgaria’s advanced education was ranked 5th amongst all countries in sciences and 11th in mathematics, according to The World Bank and The Economist, in 2005. Ranking 2nd in the world in IQ tests (MENSA International), Bulgaria also ranks 2nd in the world in SAT scores.  The country also has some German, French and Italian language competency.  Not bad for F&A huh?

What does this mean to the macro outsourcing environment?

One of the BPO industry’s prized assets just got a lot more expensive.  Several of the billion-dollar offshore providers have long-eyed EXL as an acquisition to bolster significantly their BPO competencies – and HfS has been repeatedly informing the market that rumored acquisitions of EXL were baloney.  Those outsourcers which could have significantly benefitted from acquiring EXL aren’t (yet) prepared to invest serious money in BPO and are pursuing “organic” growth strategies, while hoping to pick up bargain captives (which don’t really exist, but one can dream).  This strategy is now backfiring, with fewer and fewer realistic and affordable acquisition candidates now available.

BPO-centric outsourcers are developing real enterprise delivery competency to compete effectively for the larger-scale deals. While a year ago, many were arguing that BPO “pureplays” were a dying breed, we are seeing several of them acquiring and developing additional scale, consultative, technology and process competency to compete with large-scale outsourcers.  The term “BPO Pureplay” is quickly being replaced by “BPO-centric outsourcer”.

Posted in : Business Process Outsourcing (BPO), Finance and Accounting, Financial Services Sourcing Strategies, Healthcare and Outsourcing, kpo-analytics, Sourcing Locations



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  1. The large players, who are looking for organic growth, are going to need to show some in-the-weeds chops to beat the BPO-focused mid-sized companies – who also can likely exercise less pricing discipline and will therefore appear more attractive to buyers. Getting those operations capabilities is a real challenge. It takes a series of serious engagements over a longer period of time to show the competency. I’m fine with the wait and see attitude of the large players, but in the world of BPO, you don’t dabble in functional expertise. You go full bore, end-to-end.

    In the meantime, these mid-sized BPO-focused companies are acquiring IT capability that, if leveraged correctly, will provide platforms and technologies that will help their clients excel, deepening their delivery capability. And making an acquisition more expensive, albeit with a higher value to clients.

    What I love about these BPO companies’ post-merger integrations is that there isn’t a gigantic hassle because the clients don’t overlap – a client typically has only one F&A department, one HR department, one real estate department, one legal department, etc. What these companies need to do is more strategic – leverage their assets to develop new products/services for their existing client base, while selling the better service to new clients.

    The tale of the tape so far:
    SourceCorp and HOVS & EXL and OPI = Birds of a feather, each looking for scale synergies to take on the big guys.
    Genpact and Headstrong = Two different birds, but looking for scope synergies.

  2. Great read, as always – I learned more about these two firms in one blog post than from any other information source. It’s unfathomable why the larger outsourcing suppliers with weak BPO businesses aren’t buying up niche players like OPI. Looks like we’re seeing a new breed of larger BPOs emerge,


  3. […] several of their potential acquisition targets merging together (for example Genpact/Headstrong and EXL/OPI), the number of affordable attractive acquisition candidates is […]

  4. […] of their potential acquisition targets merging together (for example Genpact/Headstrong and EXL/OPI), the number of affordable attractive acquisition candidates is […]

  5. […] we published, OPI was acquired by EXL and Intelenet by Serco.  Read between the lines and you can start predicting other likely things […]

  6. […] are fast either plugging capability gaps or gaining advantages in markets on the BPO side (such as EXL’s recent acquisition of OPI, Genpact with Headstrong, Accenture with Ariba services, Cognizant with CoreLogic and Capgemini […]

  7. such a nice read and Tony’s got a point. The game goes down to those who has the right mentality.

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