Industry Commentary

Merchants’ Acquisition Highlights the Value of Canadian BPO

By June 6, 2018July 25th, 2023No Comments

There’s never a dull moment in the world of front-office outsourcing. This week highlighted the fact that acquisition activity is ongoing, with the announcement that Merchants has purchased Toronto-based Millenium 1 Solutions.  Going forward, the combined entity will be known as The Merchants Group.  Most notably, this move helps the South African outsourcing powerhouse expands its presence in North America.  The fact that Merchants chose to make its purchase in Canada underlines the opportunity that many providers are finding in the northern nearshore. It is no longer simply a delivery point for higher-quality, lower cost customer experience into the US. As Merchants’ move illustrates, Canada is a beach-head for North American outsourcing expansion.

Consolidation in contact center outsourcing is ongoing and is symptomatic of a healthy industry.  In recent months, there have been a number of acquisitions in the space, ranging from niche pick-ups for specific functionality all the way to acquisitions that provide the buyer with more scale in the marketplace.  Canada has been the site of some of these activities, most notably the move by TTEC (formerly TeleTech) to acquire Atelka in late 2016.  But what makes the Merchants acquisition particularly compelling is what it does in terms of strategic positioning for an overseas player.

From a practical standpoint, Merchants now has access to North America’s contact center outsourcing market by taking on a provider that is not only an established book of business, but one that is situated in Toronto, a commercial center that houses a large volume of Canada’s corporate activity.  It is also a gateway to the US enterprise community, which will afford The Merchants Group with even more business development opportunities.  This certainly will give the new entity traction to deliver from Canada and the Philippines, but also provide it with alternative offshoring opportunities.  And right now, South Africa is in a position of prominence for US and Canadian enterprise decision-makers.

The soon-to-be-published Ryan Strategic Advisory Front Office Omnibus Survey shows that among those making in-house contact center buying decisions, South Africa counts as one of the top-five most favored offshore delivery locations in the US and Canada.  With many in this community looking for new venues from which to manage front-office interactions in order to diversify their geographic footprints, Merchants’ South African presence will be welcomed.

But, in regard to Canada’s outsourcing space, this move paints a very clear picture that providers are taking this market more seriously than ever.  With a population approaching the forty million-mark, and consumer confidence rising steadily over the past two years, it makes sense that an outsourcer like Merchants would aim to dip its oar into Canada’s commercial waters.  Canada already has a dynamic contact center services sector that includes global giants such as Teleperformance, TTEC and HGS (among others). Now, as Merchants enters this competitive market, it does so equipped with a legacy player under its wing that will help it navigate its pathway into North America.