Capgemini Acquires VWA: 2011 Truly is FAO’s Year for Acquisitions!!! | Sherpas in Blue Shirts

Posted On November 16, 2011

In my blog earlier this year on Serco’s decision to purchase Intelenet, I posed the question if 2011 would be FAO’s year for significant acquisitions. After all, it was the fourth major deal of the year, following on the heels of iGATE-Patni, Genpact-Headstrong, and EXL-OPI. With Capgemini’s just-announced acquisition of Vengroff, Williams & Associates, Inc.’s order to cash (O2C) business, which operates under the name VWA, we certainly have our answer.

The increased competitive intensity (and thus the need for differentiation) in the global FAO market is in some ways reflected through the heightened M&A activity we’ve seen this year. However, unlike some of the other acquisitions that were driven by scale consolidation, Capgemini-VWA can be seen as driven by several other themes that are also relevant in today’s global FAO market:

  • Acquisition of niche players by established leaders to augment their capability – This deal will enable Capgemini to strengthen its leadership position in the FAO market through enhanced O2C offerings. Everest Group’s analysis suggests that O2C is the single largest segment in the global FAO market, accounting for nearly 35 percent of the market. O2C BPO services can help clients reduce revenue leakage, accelerate the cash-flow cycle, and limit bad debt expense – outcomes that clients are increasingly demanding in the current economic scenario. The acquisition not only brings marquee clients such as Yamaha, Chiquita, Cisco, News Corp, Walt Disney, Oracle, Cincinnati Bell, and Mattel into Capgemini’s portfolio, but also may enable it to expand the outsourced relationship with some of these companies. Additionally, VWA possesses strong process capabilities in credit analytics, cash application, and collections, supported by leading dispute and deductions toolsets
  • Building onshore O2C presence – For reasons such as increased reservation against offshoring jobs in the U.S., or O2C clients’ preference for onshore delivery of outsourced collections services for their high-value accounts, many FAO service providers have invested in expanding their onshore presence. With this acquisition, Capgemini gains onshore O2C capabilities as over 300 experts, mainly based in the U.S. (with the rest in six locations across Europe) will join its existing BPO organization
  • Enhancing platform-based solutions – With increasing market maturity, the FAO value proposition has evolved beyond cost arbitrage and is now driven by best-in-class process expertise and technology-led solutions. A key asset that comes with this acquisition is VWA’s Webcollect O2CPro platform, which combines collections risk management, predictive account scoring, and portfolio management, and provides multi-lingual and multi-currency support. Capgemini BPO has already integrated Webcollect O2CPro software into its F&A offering through the ongoing partnership it has had with VWA for over a year. With this move, Capgemini has extended its software and services platform-based BPO strategy that was developed through its 2010 acquisition of the IBX platform

With its strong capabilities in O2C, VWA has long been an attractive acquisition target. Kudos to Capgemini for not only seizing the opportunity but also for enhancing multiple aspects of its O2C value proposition in the process.