IBM Buying Procurement Service Provider

IBM said Monday it would acquire KeyMRO, a provider of Internet-based procurement services headquartered in France. Financial terms of the deal weren't disclosed.

KeyMRO was launched in 2000 by founding partners Schneider Electric, Thomson Multimedia, and specialty chemicals supplier Rhodia with an eye to reducing their procurement costs. In addition to its European operations, the company operates a U.S. subsidiary in Florence, Ky. Under IBM's ownership, KeyMRO will continue to provide procurement services for those companies under seven-year service agreements, IBM says.

The acquisition fortifies IBM's plans to garner a larger share of the market for so-called business-process-outsourcing services, through which businesses hand over routine back-office functions to an external service provider.

With computer hardware becoming a commodity market, IBM is looking to BPO services as its next big growth engine. When the company last week revealed the sale of its personal computer division to Chinese manufacturer Lenovo Group Ltd., CEO Sam Palmisano said the move would "strengthen IBM's ability to capture the highest-value opportunities in a rapidly changing information technology industry." Many observers expect that IBM will use revenue from the Lenovo deal to fund further acquisitions of BPO vendors such as KeyMRO.