General Atlantic has affirmed its commitment to the global business processing outsourcing (BPO) market with another significant investment in the sector.
In September this year, the firm paid $100m for a minority stake in Patni Computer Systems a global IT consultancy based in India. The investment was one of the most substantial investments made in any Indian software company by an international private investment group and was the largest General Atlantic has made in Asia.
Yesterday, the firm, which has around $4bn of capital available for investment, took its total investment in Xchanging, a London-based outsourcing company, over the £100m mark with a further investment of £50m.
Xchanging was set up last year when it took over the back office processing at Lloyd’s the London-based insurance market, and it has since become one of the UK’s leading business process outsourcing companies. The firm already employs 1200 people, providing HR services to over 150,000 client employees and dependants including BAE Systems as well as Lloyd's. The company settles over £20bn of insurance business between major international counterparties.
Xchanging, which is headed by David Andrews, the former head of Accenture's outsourcing business, will use the financing to continue its international expansion. The global market for business process outsourcing is dominated by Indian companies, which supply their services on average 30 to 40 per cent cheaper than their western competitors. India’s predominance has been reflected in its ability to attract venture capital, with Warburg Pincus, Chysalis Capital and General Atlantic among a growing number of investors in the sector in India.
General Atlantic says that it aims to invest around $800m annually in mid and later stage companies, investing between $25m and $100m per transaction. Despite making large investments, the firm usually takes a minority postion and does not seek a controlling interest.