OfficeTiger Roams Toward An IPO

Its MortgageRamp deal will make it a bigger pure play in outsourcing

In 1999, at the height of the dot-com boom, Randolph Altschuler's and Joseph Sigelman's co-workers wondered if the two young men had lost their minds. The best friends -- they met during their freshman year at Princeton University -- ditched their Wall Street jobs and combined annual income of $500,000 to found a startup. But not in Silicon Valley. Instead, they went to India, launching a company to provide back office services for U.S. financial giants. They were among the first to bet that well-educated workers in India could do a better job for less money preparing PowerPoint presentations and other grunt work than junior investment bankers in New York. They called the firm OfficeTiger, after the Princeton mascot, and never looked back.

Today, after years of round-the-clock work, the two 34-year old co-CEOs don't look so crazy. Nor do they regret leaving their old jobs -- Altschuler was at Blackstone Group Inc., and Sigelman was with Goldman, Sachs & Co. (GS ). Since they blazed a passage to India, hundreds of outsourcing firms have set up shop in Bangalore, Bombay, and elsewhere. But few have been as successful as New York-based OfficeTiger. It has doubled sales every year since its founding and is on track to hit $100 million this year. Execs say the 3,000-employee company has been profitable for the past three years.

Now, OfficeTiger is set to pounce again. In its first acquisition of a U.S. company, it's gobbling up Mortgage-Ramp Inc., a privately held, Atlanta-based financial outsourcer, BusinessWeek has learned. The deal, valued at $25 million to $30 million, could be announced as early as Sept. 5. The purchase provides OfficeTiger a shot at offering support services to commercial real estate lenders, services that some analysts say are poised to begin shifting overseas.

More significantly, it puts Altschuler and Sigelman firmly on the road to an initial public offering. While they've shot down the prospect of going public in the past, they now say they're headed that direction. The MortgageRamp deal will boost their sales about 35% and make them a more attractive, pure-play outsourcing firm. "This brings us much closer to doing an IPO," says Sigelman.

Although OfficeTiger is a leader, it has scores of Indian rivals, including WNS Global Services and ICICI OneSource Ltd. Over the next year or two, bankers expect a shakeout to roil the industry. "The issue for these companies will be scale," says Edward Males, managing director at investment bank Jefferies Broadview.

Sigelman and Altschuler are betting the MortgageRamp deal gives them the kind of specialized knowledge that will keep them ahead of the pack. The company will train hundreds of Indian workers to help MortgageRamp process commercial property loans, including exotic instruments, such as mortgage-backed securities. MortgageRamp CEO Ken N. Beyer, who will remain CEO of OfficeTiger's real estate division, says the industry's financial due diligence increasingly will be done overseas. "We can't keep up with the demand," he says.

If Altschuler and Sigelman have proven anything in their six years in India, it's that they know how to tap the nation's wellspring of talent. One of Sigelman's favorite recruiting spots is the Taj Connemara, a hotel in Chennai where he has spent much of the last five years. "I poach from the reception desk," he says. Sound crazy? It makes perfect sense now.

By Spencer E. Ante in New York

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