Quatrro buys McGladrey's Captive Accounting Unit

The Economic Times - April 10, 2008
Gurgaon-based Quatrro BPO Solutions has bought out the captive accounting unit of RSM McGladrey, one of the top five global tax and accounting firms with revenues of over $1.1 billion. Raman Roy-promoted Quatrro BPO will merge the acquired entity with its own accounting business and post acquisition the BPO company will have over 2,000 customers globally.

Post-acquisition, about 500-600 staff of RSM McGladrey (of which 200 are in the US), will move to Quatrro. The Indian BPO company will also get McGladrey’s accounting technology platform and top leadership. Cesar Soranio, head of the finance process outsourcing unit of RSM McGladery, will now head Quatrro’s finance & accounts practice. This acquisition gives Quatrro the distinct advantage of offering accounting services to the mid-market segment. The only other player globally in the space, Savista, was earlier acquired by Accenture.

When contacted by ET, Raman Roy, chairman & managing director of Quatrro BPO confirmed the deal but declined to comment on the acquisition size, merely stating that’s it’s a 100 percent buyout. However, market sources say that the BPO company has bought out the $18 million captive accounting unit for about $45-50 million.

On the acquisition, Roy said, “It’s a structured transaction and will help Indian outsourcing become more dominant in the mid-market segment. We will merge our technology platform with RSM McGladrey’s and offer both technology and services to our clients.’’

RSM McGladrey’s captive accounting unit caters to accounting, tax, consulting requirements of the mid-market segments which includes law firms, hospitality players, food chains, auto ancilliaries, stores, NGOs and others. Quatrro, plans to grow the 200 people RSM Gladrey team in the US, rather than shift some of the operations to India. "We plan to grow the business significantly and there is no move to reduce the numbers in the US,’’ said Roy.

The market for midsized BPO service offerings stands at about $20 billion and should grow to more than $25 billion by 2009.

On how the acquisition will help in the long term, Quatrro BPO Executive VP, new products, Srinivas R Pingali said, “Once we have access to the over 2000 customers of RSM McGladery we will leverage the relationship to offer other services like legal, market research, technology and publishing.’’ The acquisition will also help add two new centres for Quatrro BPO in the US.