Introduction

The recessionary phase of 2008-2009 brought about an interesting change in the service delivery landscape, with many GICs being acquired by service providers. However, there has been a noticeable decline in acquisition activity since then. However, service providers are still on the lookout for making acquisitions, since they see it as an opportunity to ramp up their capabilities or achieve non-linear revenue growth.

Everest Group has been closely monitoring the GIC divestiture activity for many years and has analyzed various aspects related to GIC acquisitions (30+ acquisitions), such as scale & location of GIC and incumbency status of relationship between acquirer service provider and acquired GIC or its parent. We investigate the motivations for the parent organizations to divest their GICs and for service providers to acquire them, in order to understand if it is really a win-win situation. In the process, we have also highlighted multiple case studies of service providers that have acquired GICs.

The triggers that indicate a parent company’s intent to divest its GIC have also been discussed. We believe the triggers can act as potential signals for service providers to identify targets for making a GIC acquisition. The implications of this analysis on the parent organizations and the service providers have also been covered in the paper.

Scope and Content

This report presents views on the following topics:

• Overview and background of GIC acquisition activity
• Reasons for parent organizations to divest their GICs
• Reasons for service providers to acquire GICs
• Potential triggers that might signal a GIC divestiture
• Implications for parent organizations and service providers