Ovum buys Orbys to grow outsourcing services

Ovum’s purchase of Orbys Consulting seems to have all the right strings attached. The deal extends Ovum’s client base of large user organizations and gives Ovum clients access to Orbys’ distinctly pragmatic strategies for choosing suppliers and finalizing contracts.

Orbys is a profitable $7.3 m consulting business which consults to many of Europe’s largest buyers of outsourcing services. It boosts Ovum’s bottom line, and develops valuable market share in the European market. Ovum’s share price rose around 7% this morning, taking the stock back to its level of three months ago.

Orbys has particular strengths in the most complex industries: finance, the public sector, and in logistics-led sectors such as chemicals, energy, manufacturing, pharmaceuticals, retail, transport. Joining with Ovum should allow the firm to extend its meager base outside Europe. Its clients in the Americas include a number of petroleum companies, including the operations of BP‘s Amoco business in the US and ENI Lasmo‘s business in Venezuela. All of this pretty astonishing for a group of just ten people, aided by some adjunct associates. However, Ovum’s global reach will allow Orbys to better win and service clients in the US, East Asia and Australia.

Ovum may pay around $6.8 m for the firm, of which almost $3 m is dependent on revenue targets over the next year. If the enlarged business continues Ovum’s current growth rate, the firm’s revenues will be around $43 million this financial year.

Ovum sees further benefits resulting from the merger. It feels that outsourcing is counter-cyclical; a view that many might not share. It also seems benefits in Orbys’ reputation as a pragmatist; a quality not normally associated with Ovum’s more systematic foundations.

As with the purchase of Holway, however, physical distance could make the coming together of the cultures easier to manage. OvumHolway’s principal office remains in the conservative market town of Farnham, allowing the team to maintain something of a separate identity. Similarly, although Orbys’ contact address is a Regus office in central London the firm is actually based in Witney, another conservative market town.

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.