Eclerx to remain aggressive about acquisitions

Industry:    

Inorganic growth through acquisitions will remain an integral part of the business as the need for digital solutions grows for Eclerx, said a top executive at the company that provides business process management solutions.

Adding new global delivery locations and identifying large demand pools where the company could expand its client base have helped it perform right through the pandemic, cofounder PD Mundhra said.

In 2020, Eclerx announced the acquisition of Personiv, an outsourcing provider with offices in the US, India and the Philippines, for $34 million. It had previously acquired CLX in Europe in 2015 and Agilyst in 2012.

Eclerx is looking for acquisition targets which offer a strategic fit in terms of market and client base.

“We keep looking very aggressively for companies because we do believe that inorganic growth is an important vector of growth in our industry. We would be interested in looking at product companies only if we saw a very clear fit with one or more services that we are offering, because offering standalone products is not sort of what our business is about,” said Mundhra, who is also its executive director.

He added that the ability of the target companies to offer a mixture of products and services along with a stable management that can function even if founders choose to exit would be some of the key elements while looking for M&As.

The recent acquisition is expected to help leverage synergies in digital and customer experience services, adding around $32 million annual revenue to Eclerx, according to analysts.

The company has reported rapid expansion in revenue from “emerging” client groups during the past eight quarters. This group comprises all clients outside the top ten by revenue.

Mundhra said while the company’s BPM employee base has largely been stable, niche digital skills have witnessed employee churn. “In FY21, Q2 our headcount was 8,500 and last quarter (Q2 FY22), it was 13,500. So, we witnessed a 50% increase over a four-quarter period. So, a lot of hiring is happening,” he said.

Most of the employee addition has happened in low-cost locations. This includes delivery sites in North Carolina in the US, Italy, India and the Philippines (through the Personiv acquisition).

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