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EPAM Systems Acquires Again, Scoops Up Alliance Global

A year after expanding its offerings beyond software engineering outsourcing, EPAM Systems is adding to its portfolio.

A year after expanding its offerings beyond its core of software engineering outsourcing, EPAM Systems is adding to its portfolio after acquiring Alliance Global Services, EPAM said Monday.

EPAM said the deal for Alliance, based in Conshohocken, Pa., will expand EPAM’s reach in software engineering productivity and automation services. It specifically cited Alliance’s ’strong delivery capabilities’ in North America and India for those services.

"The scale and complexity of the solutions demanded today by our global customers challenges us to consistently maintain our traditional level of quality, regardless of the geographic locations and different time zones we are delivering from,’ said Arkadiy Dobkin, EPAM’s CEO and president, in a statement.

[Related: Upping The Services Ante: 12 M&A Deals Reshaping The Channel]

Dobkin said the deal should allow his company ’to address global challenges more effectively’ and solidify EPAM’s position in software product development services (PDS). Last year, EPAM was recognized as a leading PDS provider by Forrester Research.

EPAM is based in Newton, Pa., about 30 miles east of Alliance Global’s headquarters in the northern suburbs of Philadelphia.

EPAM paid $50 million in cash for Alliance Global, EPAM CEO Anthony Conte said Wednesday morning in a conference call to discuss the acquisition.

With this acquisition, EPAM is revising its full-year 2015 revenue forecast and expects revenue of at least $905 million, with earnings per share of at least $2.66. Those numbers are up slightly from $900 million and $2.65, respectively, from the company’s third-quarter financial report, released Nov. 4.

In that report, EPAM -- No. 40 on CRN’s 2015 Solution Provider 500 list -- reported revenue of $236 million, up more than 22 percent from the third quarter of 2014. Net income, meanwhile, soared more than 20 percent, to $14.5 million.

Alliance employs more than 1,200. It has an office in Chicago, as well as offices in Hyderabad and Pune, India.

In 2014, EPAM went on an acquisition tear, buying several companies with various capabilities, helping the company broaden its offerings and its geographic reach. It now employs about 14,000.

Martin Wolf, president and CEO of martinwolf Global M&A Advisors in Walnut Creek, Calif., sees EPAM’s acquisition as potentially good for both sides if Alliance Global is integrated properly.

’Growing [Alliance] was key to driving buyer interest,’ Wolf wrote in an email newsletter that assessed the transaction. Alliance CEO John Castleman ’is well respected for personally directing the growth of the company's India operations and moving Alliance up the value chain."

’This transaction will pair the company with a like-minded strategic [partner] that is well-equipped to help it grow,’ he said.

PUBLISHED NOV. 16, 2015; UPDATED NOV. 18, 2015

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