Stefanini’s Onshore Acquisition a Sign of Things to Come

By Tarun George

Today’s acquisition announcement of TechTeam Global by Stefanini IT Solutions was not entirely unexpected given the increasing indications by Nearshore players that they plan to bulk up onshore.

Stefanini, one of the largest IT services and consulting firms in Latin America, will benefit greatly from TechTeam’s BPO and IT support and help desk capacity. But there’s a bigger trend taking shape here than simply two companies merging capabilities to expand services. TechTeam is US-based. Stefanini is a Brazilian heavyweight. Remember all the talk about ‘the coming wave of onshore’? In a sense, the wave starts here.

Back in June, Nearshore Americas ran an article titled The Onshore Outburst in which we predicted high profile movements in the following months by Nearshore players onto US soil. We expected that “acquisitions will be led by Latin American providers with a focus on BPO and IT services, that are determined to be closer to potential customers and put their project managers in the client’s backyard”. This acquisition of TechTeam, a prominent US player with global headquarters in Michigan, is indicative of the effort by Nearshore providers like Stefanini to increase their onshore footprint.

Add this to the aggressive marketing campaigns by US states competing for quality investment, the availability of low cost rural sourcing options, and the arrival of large offshore players like TCS and Infosys – and it’s clear that the United States has become an important part of clients’ sourcing portfolios.  We expect more deals of this nature (offshore players buying US firms) in coming months and years. (Infosys in fact may be turn out to be the most pivotal player as its healthcare practice expansion may be predicated on ‘keeping’ some activities onshore, therefore providing added incentive to expand a onshore base.)

TechTeam Global also has a significant reach in continental Europe, which Stefanini  will look to leverage. The two-part acquisition will merge TechTeam with a US subsidiary of Stefanini for a total value of around $93.4 million. Stefanini has made a ‘tender offer’ to buy all outstanding common shares of TechTeam at $8.35 per unit, and the entire transaction is scheduled to be approved and completed before the end of 2010. Stefanini has approximately 9000 employees around the world, while TechTeam employs 2100.

Stefanini officials were not able to comment on the deal as the tender offer must still pass through review by the SEC.

Read more details of the acquisition here.