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Nasdaq listed BPO firm EXL Service Holdings have acquired American Express’ travel services captive in India for $30 mn. The acquired travel services unit does the global back-office activities, including account reconciliation, airline settlements, customer specific value-added services, such as MI & Analytics. As part of the transaction, EXL gained around $160 million outsourcing contract spread over eight years. Around 800 professionals currently working with AmEx’s global travel service unit will also move to EXL Service’s payroll. Currently, EXL has around 10,500 people on the rolls.
The acquisition, expected to be closed by the first quarter of next year, will help EXL expand its capability in analytics, exception processing and transaction processing. The new unit created for EXL will also do work for third party clients in the travel space.
AmEx’s captive BPO unit caters to the bank’s own clients, providing back-office support covering travel-related services, credit cards, accounting, customer care and financial processes for the company’s worldwide operations. AmEx also outsources work to several local BPOs and software vendors in India.
Its banking operation in India was acquired in 2007 by Standard Chartered as part of a global deal. Divesting non-core captive operations is a strategy adopted by companies, such as Citigroup and UBS, for focusing better on their core operations, and also gain better outsourcing rates by bundling such transactions with a multi-year contract.
An upfront payment also helps them unlock value from non-core assets. Citibank sold its Indian back-office business to TCS for around $505 mn in October last year, and Citi Technology Services for around $127 mn to Wipro in December last year. Both these transactions came with assured outsourcing business of around $3 bn together for these vendors.
Earlier this year, EXL also acquired the BPO unit of US-based Schneider Logistics in Czech Republic. Interestingly, EXL incurred forex losses of around $2 mn during the quarter, which was much more than the $1.5 mn of revenues it earned from Schneider business in the past three months. Despite a good visibility in business, EXL expressed its concerns on the weakening US dollar. It sees revenue from transformation business coming down in the fourth quarter on account of winter holidays in the West.
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