EXL Has $200-mn War Chest to Acquire Firms

The areas where EXL is looking to acquire companies is insurance, banking, and analytics

“We have about $200 million of cash on the balance sheet so we can use that to acquire companies. Typically, our sweet spot is to buy companies, which cost us between $25 million and $50 million, but we don’t mind doing companies which are larger in size,” EXL Chief Executive Officer and Vice-Chairman Rohit Kapoor told Business Standard. He said the areas, where EXL is looking to acquire companies are insurance, banking, and analytics.
Noida-based business process outsourcing (BPO) company EXL is looking at spending $200 million to acquire companies in the field of insurance, banking and analytics as it looks to strengthen its core verticals.

“We focus on a few core industry verticals, so we would be the market leader in insurance. We dominate that market, almost 50 per cent of our revenues come from insurance. We are very strong in banking, analytics, and health care, so those are areas where we differentiate ourselves,” Kapoor said.

The industry is changing because a lot of robotics has come in, a lot of automation, technology platforms and this move towards digital transformation is creating new types of opportunities for the company, he said.

Kapoor said under digital transformation, people are looking for two things: One, they want to enhance customer experience and second, they want to transact and do things online. “So we have started to acquire assets, which will help companies do that. At the end of June, we acquired a company called Liss Systems that has been creating a technology platform that allows you to sell insurance policies online and we are finding a lot of our clients are wanting to move in that direction,” he said.

EXL did another acquisition in July when it bought IQR Consulting, a provider of marketing and risk analytics solutions.

Asked about the political rhetoric against outsourcing in the US, from where EXL gets about 70 per cent of its revenues, Kapoor said  outsourcing will continue because that’s the only way US companies can remain competitive. “Every time there is a presidential election, the political rhetoric goes up but nobody makes any changes in the law because this is something, which works well. Remember in BPM (business process management), we don’t need immigration and we don’t need H1-B visas, that is for IT. So, if they decide to do something, they can control immigration but they don’t control trade and our work is based in India,” he said.

On a query about slowing growth in the BPM sector, Kapoor said growth has slowed down for India but the Philippines is growing rapidly. EXL started operations in South Africa and “we have opened up in Columbia, so these countries are actually taking some of the market share that India used to get but the advantage of India is analytics because of the skillset and talent pool available here,” he said.

About staff strength, Kapoor said the company has about 24,000 employees — 17,000 in India, 5,000 in the Philippines and 2,000 in the US, among other countries.

Reference - http://www.business-standard.com/article/companies/exl-has-200-mn-war-chest-to-acquire-firms-116093000747_1.html