Background and Challenge
A global information technology (IT) and business process outsourcing provider had undergone a period of development to position it for substantial growth by enhancing management and overhead capability, and investing in additional resources. With the encouragement of investors, the business needed to develop a robust corporate strategy that would enable it to double in size within four years and achieve a top-three position in each of its chosen markets.
Approach and Recommendations
With such an ambitious objective, L.E.K. Consulting considered a wide range of possibilities for expansion, including opportunities for acquisition as well as organic growth. A foundation stone of the process was the development of a strategic decision framework that would create genuine insight into the market and place any potential acquisitions into a strategic context.
Specifically, we were tasked with providing robust analysis of a number of key issues:
- Quality of the current business unit portfolio
- Development in services, industry sectors and geographies, and those to be de-prioritized or exited
- Optimal expansion routes and areas for investment
In conducting its research, the team conducted more than 70 interviews with market participants in the U.K., U.S. and Asia Pacific regions covering customers, competitors, commentators, and regional management of the client itself.
Through a detailed analysis of the client’s past performance and relative positioning, and an assessment of the future market dynamics and demand profile, we developed a new and highly differentiated service offering that would leverage the organization’s existing strengths, afford greater access to adjacent revenue pools, and drive superior margins. In doing so, a number of capability gaps were identified and we created a plan to address the additional requirements organically and through acquisition.
Sector and geography analysis revealed the areas that should be exited, where effort should be concentrated and where acquisitions were necessary to achieve the magnitude and speed of targeted growth. The decision-making framework proved critical in ensuring a consistent method of assessing acquisition opportunities.
The project provided the client with a clear strategy and a detailed action plan. Our recommendations were accepted and the client proceeded with implementation.