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Possible purchase by unit of UK bank of CPA Global, one of the largest Indian LPOs

Guest author Bob Unterberger sent me this item, which I edited slightly.

The UK financial giant Lloyd’s Bank is close to buying CPA Global, one of India’s largest LPOs. The New York Times reports that Lloyd’s will purchase CPA Global for about $700M. Neither Lloyd’s or CPA Global have confirmed a final deal.

The Lloyd’s-CPA Global deal occurs just as there’s an LPO industry shakeout. The smaller uncompetitive “mom and pop” LPOs are closing down. Many boutique LPOs, generally specializing in only one or two practice areas, failed to find the sweet spot. Some of India’s larger Business Process Outsourcing companies (e.g., call center providers), have shuttered their LPOs out of fear of providing poor legal services to current clients (and killing the relationship) or frustrated that the legal “cycle” doesn’t provide the immediate returns that BPO does. Or both. Finally, a handful of India’s larger stand-alone LPOs are fighting for outside funding, and many are losing the battle. It’s worth noting that the Lloyd’s-CPA Global deal puts an actual value on LPO. LPO numbers are dominated by misleading industry reports.

The shake up has led to deals like Lloyd’s-CPA Global. Next, look for India’s BPO global giants to take on legal services in a big way, having learned the lessons of those smaller players who dove into the pool first.