After three months of talks, Teleperformance is to acquire Aegis' U.S, Philippines and Cost Rican operations for $610m. The transaction will involve the transfer of 19,000 agents (18,000 work stations) in 16 centers, representing ~$400m in annual revenues. 

Aegis will bring to Teleperformance the following operations:

• The U.S: nine sites with ~5,300 total seats
• The Philippines: six sites with ~11,500 total seats
• Costa Rica: one site, with ~800 seats.

This acquisition fits in with Teleperformance's long-established, but until recently stalled, strategy of inorganic expansion. As a result of this acquisition Teleperformance should achieve annual revenues of ~$4bn, (2013 revenues: $3,236m) further cementing its place as the largest CMS BPO provider globally, and putting clear water between it and 2013 number two player Atento (2013 revenues: $2,821m) and Convergys, which this year has overtaken Atento as the second largest CMS BPO provider with expected 2014 revenues of ~$3bn. 

What does this mean for Aegis?

This disposal represents around half of what was left of Aegis' global revenues (~$800m) after the inter-company transfer of AGC Networks to Aegis' parent organization the Essar Group.

Post-disposal, Aegis will have 37,000 agents across 37 centers and will look to continue to grow its portfolio in India, Malaysia, Australia, Middle East, Europe and LATAM. Aegis indicated its intent to remain in these markets with the acquisition of Malysian based Symphony BPO in January 2014.

What does this mean for Teleperformance?

This acquisition will boost Teleperformance's onshore, nearshore and offshore  support to the U.S., which it has been indicating as a priority for acquisiton (followed by BRICS markets): 

• Onshore, Aegis' footprint in the U.S. complements Teleperformance's current geographic footprint, in particular bringing in centers in the west and central regions, increasing its geographic coverage across the nation
• In terms of U.S. offshore, Aegis' centers in the Philippines are largely in the delivery hubs of Manila and Cebu, in proximity to Teleperformance's operations, and will increase its delivery capabilities in this key CMS delivery geography (where Teleperformance has been expanding) to nearly 34,000
• And nearshore, in Costa Rica, Aegis will bring in a second delivery location in San Jose, augmenting Teleperformance's existing capability in Santa Ana. 

Secondly, the acquisition will mean a slight change in sectorial mix for Teleperformance's business in the U.S., reducing its dependence on the telecoms sector, and increasing its revenue contribution from the BFSI verticals (from 13% to 14%), from healthcare (more than doubling, but only to 5%), and the travel sector (from 4% to 6%). The U.S. BFSI and healthcare verticals in particular are attractive sectors for CMS BPO service providers, as they provide opportunities for higher margin services. 

Overall, this acquisition is more about geography than it is about client vertical or portfolio enhancement. Teleperformance is targeting higher margin verticals and services: will we see futher, smaller, inorganic growth to boost its onshore presence in these verticals? It has to be a possibility.