GEP Slips in Under the Outsourcing Radar (Part 2)

Click here for Part 1 of this series.

In this "preview" post series looking at GEP and their results in 2011, we'll continue by sharing a bit more on their background and demographics. To start, the firm now has over 700 employees. This number will be surprising for those who blinked on their first take on the BPO market a couple of years back. And unlike other offshore BPOs, which often share resources between areas (e.g., AP and procurement), this count can't be exaggerated because of GEP's razor focus on procurement. Today, GEP's growth is coming from both its technology and services (BPO/consulting) practice areas. GEP shared with Spend Matters at the end of 2011 that just over a third of their business was pure technology with the remaining split between sourcing and BPO work.

For services delivery, GEP focuses on a blended model with hybrid project delivery teams based across the US, Europe, Latin America and Asia. Its principal offshore locations are in Mumbai and Shanghai. Moreover, GPOs customers are also global -- and decentralized -- mimicking its service delivery orientation. Specifically, GEP today has over 125 customers spread across roughly 20 industries and 8 countries. In its latest momentum announcement, GEP noted that "2011 saw the emergence of Latin America as a strategic geography for GEP" and "with its expanding operations in Mexico and Brazil, GEP continues to make inroads into Latin American market" including the signing of a "Brazilian foods company."

While we'll save our detailed summary analysis on GEP for our forthcoming series, here's a sneak preview of where we stand on five takeaways:

  • GEP has successfully blended (with varying degrees of product sophistication, but at nearly all levels, highly competitive functionality) software and services (BPO and sourcing) in an organic offering -- this is something no other provider we have observed in this market has successfully done
  • With its own assets plus Enporion's, GEP can -- and should -- make a bigger push in the P2P market. Watching them in this area and relative solution depth -- from requisitioning to catalog content management to supplier enablement and e-invoicing -- should be fascinating
  • GEP has succeeded in the procurement market with relatively minimal corporate marketing, product marketing and overall non-solution focused customer-facing investments to date. As GEP further professionalizes its marketing and customer face to the market, only good things can happen
  • Other offshore BPO providers are likely to continue to pursue GEP as a golden acquisition prize, but we suspect given the overall growth rate and profitability of the organization, that such pursuits will likely not result in a deal in the coming 18-24 months (in part because GEP knows it has built the building blocks of a firm that is likely to get into the $100MM+ revenue territory on its own and grow from there)
  • The opportunity to develop unique capabilities on an industry and category basis from both owning/developing unique IP combined with software assets as well as acquiring organizations with specialized capabilities brings the potential for significant sourcing-focused differentiation in the future

- Jason Busch

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