NorthgateArinso purchases Convergys HR Management business

Call Center

NorthgateArinso operates many call centers. Photo from Flickr.

In a live webcast this morning, NorthgateArinso, a British-owned Human Resources Management firm announced that it will be purchasing the HR division of US-owned Convergys (NYSE: CVG). This purchase will add 2,300 employees to NorthgateArinso’s staff of 5,000. The $100 million price tag means Convergys will be getting a quick payday from NorthgateArinso. NorthgateArinso’s purchase will also help Convergys’ plans to refocus is business strategy on its customer-care and information management divisions.

NorthgateArinso focuses on Human Resources services

NorthgateArinso’s main business is Human Resources management for a wide variety of clients. On NorthgateArinso’s website, they point out that these services include recruiting, training, payroll services, and HR software. They have clients and business operations in 31 countries and service almost one-fifth of Fortune 500 international companies, including AstraZenea and Cadbury.

Convergys focuses on Customer Care services

Convergys is a much larger company than NorthgateArinso, with over 75,000 employees. Their two main businesses focus on managing customers and information. According to the Convergys website their business includes providing customer support in 35 languages for many large and small companies, include General Motors and Comcast.

NorthgateArinso will become 2nd largest provider

With the purchase of Convergys’ HR division, NorthgateArinso will be vaulting past Oracle to become the 2nd largest provider of Human Resources outsourcing in the world. According to the Times Online, when this purchase completes in the 2nd quarter of the year, NorthgateArinso will be taking on at least some of the HR duties for large companies such as Dupont, Johnson & Johnson, and Honeywell.

Convergys recently NorthgateArinso-purchased division

The CEO of Northgate stated in this morning’s webcast (available here) that while the HR division of Convergys had lost over $500 million in the last few years, the division had been recently restructured and NorthgateArinso will only be purchasing the profitable parts of the company.

The Stock Outlook for the NorthgateArinso purchase

NorthgateArinso is owned by Northgate Information Solutions, a software company listed on the London Stock Exchange as NIS. Their stock price has remained steady over the last few years at about 95.25 – and according to Personnel Today, private money lenders and equity firms have invested significant amounts of cash in the company. Convergys’ press release also states that they expect this sale will lead to stock earnings.

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