OfficeTiger: Tiger, tiger, burning bright

A relative newcomer to India’s business process outsourcing scene, New York-based OfficeTiger is concentrating on the judgment-based core functions of clients

OfficeTiger is an unusual animal in the virtual zoo of India’s business process outsourcing (BPO) industry. Set up barely six years ago by two young Americans after friends and ex-colleagues chipped in for seed capital, New York-headquartered OfficeTiger has emerged as a major player in BPO services, with two large operations in Chennai in southern India, and smaller outlets in Colombo and Manila. The company employs 4,000 people worldwide, and its clients include Fortune 500 companies, investment banks, global consulting and accountancy firms, global law firms and retail chains, among others. Co-founder Joseph Sigelman forecasts that his company’s revenue will be about US$135m in 2006.

As this issue of Business India Intelligence goes to press, it is learnt that RR Donnelley, a US-based company which is a leading global provider of print and related services, has signed a definitive agreement to acquire OfficeTiger for about US$250m. However, OfficeTiger will continue its current operations as an independent business unit of RR Donnelley. The transaction is subject to regulatory approval and is expected to close in the second quarter of 2006. “Having been a customer of OfficeTiger for several years, we are pleased to announce this acquisitionas the logical next step in building our global BPO business,” said Mark Angelson, RR Donnelley’s chief executive.

Focus on being different

Besides the entrepreneurial capabilities of Mr Sigelman and fellow founder Randolph Altschuler, OfficeTiger’s roaring growth has been due in part to its decision to be different. While most BPO companies thrive on call centres or back-office work of secondary importance, OfficeTiger has targeted the high-end segment, offering knowledge-based outsourcing that is industry-focused, “judgment-based” and supports core functions of a client’s business. These are mission-critical services, requiring OfficeTiger professionals to apply their judgment–such as preparing a key presentation for a US chief financial officer within an hour, providing audit support for a global accounting firm or undertaking financial research and analysis for bankers.

Initially, it was not easy for OfficeTiger to sell the idea to US companies that they should outsource office functions considered critical. While companies were used to the outsourcing of information technology (IT) support services, routine clerical work, and well-defined functions like customer support through call centres, core office functions were always handled in-house.

However, over time, OfficeTiger was able to convince more and more companies about the benefits of outsourcing these functions. OfficeTiger continues to focus on judgment-based outsourcing services such as print and publishing solutions (from concept through design and composition to pre-press services and release-to-print), research and data analytics (such as business information services, financial analytics and strategic market research) and financial management services. That OfficeTiger offers “real-time” solutions is evident in that about one-third of its assignments are delivered in less than an hour.

Using the abundant talent in India

Like other BPO firms, OfficeTiger also has benefited from the abundant supply of well-educated talent in India, available at low cost. It places considerable emphasis on training, which is particularly important given the company’s focus on high-end BPO work. A distinguishing feature of OfficeTiger is its placement of a number of Western managers in its offshore facilities in Asia. These managers have prior experience as either BPO vendors or users of such services. Besides their expertise, this has helped to bring to the Indian operations the contextual environment of the work being performed.

Given the critical nature of the work being outsourced, this is not a bad idea. Another source of comfort for clients, especially since their interaction is required for such assignments, is on-site presence. Indeed, although the bulk of work is conducted elsewhere, OfficeTiger has been very particular about establishing a strong presence in the geographical origins of its client base: North America, the UK and Europe. An integrated on-site/offshore service delivery model has also enabled OfficeTiger to obtain larger BPO accounts that require domestic collaboration.

Starting from a small steel warehouse in Chennai in 1999, the company’s facilities in the city now cover more than 110,000 sq ft. Its smaller outlets in Colombo and Manila, set up in 2004 and 2005, serve mainly as “business continuity sites” to contain risks if there are any disruptions in the Chennai operations.

To establish its global footprint as well as expand its business rapidly, OfficeTiger has relied on growth through acquisitions. In 2004, it bought the Devonshire Group, based in the UK with smaller operations in Germany. Devonshire, with 290 employees and annual revenue of about US$20m, provides (or acts as a consultant for) outsourced creative, document and staffing solutions to professional services firms in the UK and Europe.

The same year, OfficeTiger forged a partnership with Hildebrandt International of the US, a legal consulting firm, to use its expertise for specialised legal outsourcing. Then in September 2005 OfficeTiger acquired MortgageRamp, a leading US provider of BPO and technology solutions for the global property-finance industry. The deal added 150 clients, including many global financial institutions, to OfficeTiger’s client base.

According to Mr Sigelman, the diversity of clients means that OfficeTiger is not overly dependent on just a few for revenue. That, as well as a strong sales infrastructure in the US, has helped OfficeTiger to grow the business. The company has occasionally received financing from private-equity investors to support its expansion. In 2001 it obtained US$10m from two UK companies: Elwin Capital, a venture-capital firm, and Mountgrange, an investment firm. Then in 2004 Francisco Partners, a US-based private-equity company, pumped in US$50m to help to drive OfficeTiger to the next level of growth.

Outlook

What does the future hold? Stiffer competition, for a start. OfficeTiger’s success has attracted imitators that now offer similar services. But Mr Sigelman believes his company has the advantage of scale, since clients outsourcing critical functions might not like to work with small companies that may not be around in the long term.

Now, with the announcement of its acquisition by RR Donnelley, OfficeTiger, functioning as an independent business unit (with Mr Altschuler and Mr Sigelman continuing at the company’s helm as co-presidents), will have access to the huge resources and infrastructure of RR Donnelley to grow even further.

SOURCE: BUSINESS INDIA INTELLIGENCE.