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First Quarter 2010 Part 4 of 4: Strategic Outsourcing Partnerships Abound in March

|Includes: Convergys Corporation (CVG), SYNT

By: Audrey B.

What have certainly abounded this first quarter are the strategic partnerships that have been formed among different types of companies across the industry. Efforts to diversify their product offerings are at the root of this trend as competition for outsourcing contracts increases.

Just for this quarter alone, there has been a surge in strategic partnerships being formed especially among smaller outsourcing companies. For the IT outsourcing industry, spend management, sourcing and procurement services provider Perfect Commerce announced a partnership with fellow IT and procurement outsourcing provider Corbus LLC. The two companies are combining their expertise in spend management, technology expertise and continuous process improvement in order to offer better services to their clients. Another partnership is between DirectPointe, Inc., a U.S.-based managed IT outsourcing services provider, and Concierge Communications, a national consulting, business communications and technology solutions broker. The companies are working together to offer IT outsourcing tools and managed IT services. Their partnership was announced on the 2nd of March.

With regards to cloud based services, it was Fortify Infrastructure Services who formed a strategic partnership with Key Pair Technologies in order to provide comprehensive cloud computing solutions for enterprise companies and data centers. Meanwhile with business process solutions, or to be more specific, in offshore publishing services, companies Liquent and TAKE solutions (NSE:TAKE) formed a partnership to provide a “best-of-breed, cost effective, outsourced publishing solution to the market,” to quote Liquent's Chief Executive Officer, Rick Riegel. Both partnerships were signed on the 4th of March.

Also on the 4th of March is a strategic partnership between Hexaware Technologies (NSE:HEXAWARE) and EbaoTech, wherein eBaoTech will be offering best-of-breed policy administration systems to insurers; while Hexaware will be providing end-to-end system integration services for their clients. For Knowledge Process Outsourcing, it is companies’ Syntel (NASDAQ:SYNT) and MEGA who have partnered in order to be able to deliver an “integrated and streamlined solution to address governance, risk and compliance challenges.”

It is not, however, just the smaller companies that are following this trend. Even more established companies such as Mphasis (NSE:MPHASIS) and Intalio, and HCL Technologies (NSE:HCLTECH) and Wellogic have formed partnerships this past month. It is Convergys (NYSE:CVG) however who takes the cake, signing two separate strategic partnerships within a week of each other. The company signed a partnership with Latin America services provider Sonda (SCL:SONDA), on the 9th of March. Then on the 16th of March, the company once again signed a partnership, this time with MicroAutomation.

The renewed focus of different outsourcing companies with strategic partnerships is ultimately in line with obtaining more contracts in the next few months. The trend for more strategic partnerships is only expected to increase as 2010 progresses and the economy recovers. By our estimates, March is only the beginning for this trend.

Disclosure: No Position