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Synnex's IBM Call Center Services Buy Makes 'Quite a Bit of Noise'

September 13, 2013 - News

**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q2 2013.**

Synnex subsidiary Concentrix now stands as one of the largest brands in the call center market, thanks to its $505 million purchase this week of IBM's customer services business.

Further, the deal gives Synnex distributors transitioning their revenue bases from up-front compensation to recurring revenue yet another option for achieving that goal.

The buy "elevates the previously Tier 2 player into one of the top players in the industry, and we expect it to make quite a bit of noise given IBM’s history, capabilities and client base that Concentrix is picking up," said Margaret Goldberg, IT services analyst at research firm Ovum.

In addition, Goldberg said, Synnex now picks up IBM as a major alliance partner; that's because Synnex, a distributor, and IBM announced a multiyear strategic business partnership where Synnex will provide global call center services for IBM.

"This transaction illustrates the continuous effort of CRM vendors to diversify, as the acquisition will help Concentrix increase the depth and breadth of its offering including capitalizing on technology trends from mobility to cloud systems to analytics," Goldberg said.

But the sale also marks an "interesting move" for IBM as the company tries to get away from operating divisions that generate relatively low margins, Goldberg said. IBM is working to move up-market into IT services, consulting and cloud. Still, though, thanks to the arrangement with Synnex, IBM remains able to offer call center services, "without shouldering the financial challenges of that business," Goldberg said.

"We will be curious to see whether IBM makes similar decisions regarding other parts of its business going forward," she added.

The agreement is expected to close within the next few months. Synnex is paying about $430 million in cash and $75 million in stock.

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