On 20th March, print-services company R.R. Donnelley announced that it would acquire OfficeTiger for $250 million, making it the biggest acquisition in the nascent offshore BPO industry. Donnelley will merge OfficeTiger with Astron, a BPO company that it had acquired in June 2005. The combined entity will be called OfficeTiger, and will have 6,000 people.

OfficeTiger has come a long way since the humble beginning it made in 1999 when the two co-founders — Joseph Sigelman and Randolph Altschuler — invested $6 million to set up a delivery center in the South Indian city of Chennai. At that time when most startup offshoring firms in India identified the offshoring opportunity with call centers, OfficeTiger established itself as a firm focused on non-voice services. It targeted the not-so-hot verticals of publishing and professional services — the first, considered untouchable and the second, inaccessible by most outsourcing companies. It created PowerPoint presentations for consulting firms and investment bankers like KPMG and Credit Suisse. “We virtually did whatever came our way,” says Joe Sigelman. Sigelman co-founded the company along with Randolph Altschuler.

Today, OfficeTiger employs 4,000 people, and boasts of a revenue of $100 million. It expects its revenue to go up to $139 million (premerger), and is considered to be one of the healthiest offshore business-services outsourcing companies. It focuses on two areas. First is premedia, which includes word processing, presentation, desktop publishing and all publishing domain services up to prepress. This contributes to 40% of the company’s revenue. The other area includes research and analytics, financial-management services and legal services.

Though it won’t reveal the names of the clients, industry sources say that top American legal firm, Milbank, Tweed, Hadley & McCloy and U.K.-based legal major, Allen & Overy are two of its biggest clients in the legal domain. In financial publishing, Merrill is one of its top clients.

With its focus on knowledge-intensive services, OfficeTiger may at first glance look like any professional-services firm with the added advantage of offshore labor arbitrage, but in reality it has focused equally on delivery efficiency. In a study undertaken by Wharton professor Ravi Aron and his team, OfficeTiger came out strongly in many parameters measuring efficient operations. The two most notable parameters were growth in productivity and capital substitutability of labor. The latter means maximizing technology investments to reduce the role of labor, thus increasing organizational productivity.

While building a strong knowledge culture and investing on operational efficiency, OfficeTiger has acquired two companies, U.K.-based Devonshire Group and U.S.-based MortgageRamp, an erstwhile subsidiary of General Motors — both acquisitions coming after a $50 million equity investment by Francisco Partners in 2004.