Jilted — What Happens When Your Provider Sells the Service Line That You’re Buying? | Sherpas in Blue Shirts

Posted On October 7, 2013

So you’re in an outsourcing relationship and so far you’ve achieved impressive results in meeting your objectives. Then you wake up one day to the unwelcome news that your service provider sold that line of business to another company and you’re now relegated to a provider you didn’t select. What should you do? Do you need to start flipping through the pages of your contract? Should you be concerned? Let’s face it: this isn’t a far-fetched scenario; it easily could happen to anyone.

In fact, it actually did happen to you just a few weeks ago if your organization was buying voice and call center services from IBM. Big Blue sold its customer care outsourcing unit to Synnex and its subsidiary Concentrix.

Maybe you now feel like a jilted lover — and rightfully so. IBM loved you when they signed the contract. But now they’ve sold your contract.

It’s not a new problem by any measure, but IBM’s recent divestiture brings heightened awareness to the fact that buyers can end up with a different service provider overnight — perhaps even one that they considered early on but rejected in final selection, opting instead for the strength and commitment of the chosen partner. It feels like a betrayal.

Having said that, I think customers can get overly excited about such a situation.

So what is the best way to deal with a situation like this?

As with many of life’s surprises and dilemmas, the answer is situational. In this particular case, the fact that the provider is IBM makes a significant difference. IBM is well known for divesting assets in its portfolio that are viewed as a mature or declining space for IBM and thus would not receive ongoing investment from IBM. But Big Blue has a tradition of standing behind its services and ensuring that the services are delivered even if it sells that business. And that is what happened with the sale to Synnex.

Synnex will combine the IBM business with the business of its subsidiary Concentrix, whose core business is running outsourced call centers in the customer care space. So the silver lining in this cloud for IBM’s former customers is that their new provider will be willing to invest in deeper call center capabilities and technologies.

The divestiture leaves IBM freer to invest in analytics technologies in the customer care space. As further evidence of IBM standing behind its commitments, Concentrix will become an IBM business partner and the providers will jointly pursue business opportunities.

IBM has a history of entering into and maintaining ongoing relationships with the buyers of services that indicate they want to invest in the service space. Certainly buyers need to pay attention to this situation, but it could be a very good outcome for Big Blue’s former customers in this space.

However, not all providers have the integrity of an IBM, so customers should be concerned about their providers selling a service line the customer is buying. Our advice is to make sure you have contingency plans in place in case it happens. A moment of reflection up front plus due diligence in the provider-selection phase is equally important. Ask yourself: Does this potential partner for us have the integrity and commitment of IBM for ensuring a good outcome for us whether or not they sell the service line, or could we end up jilted?

Everest Group Executive Viewpoints icon Related Articles