UK-based international services firm Serco has acquired Indian BPO company Intelenet for Rs 2,772 crore, making it the largest acquisition in the Indian BPO space. It pips the $550 million (Rs 2,475 crore) that Genpact paid in April to acquire Headstrong. The acquisition of Intelenet supports our ambitions as a leading global service company. The international BPO market is growing quickly as companies seek out new ways to improve their service and reduce costs, Chris Hyman, the chief executive of Serco, said in a statement. ntelenet offers a broad range of BPO services including transactional, voice support, finance and accounting services in markets like the US, UK and India. It focuses on the banking, financial services & insurance, travel, hospitality & transport, and healthcare sectors. The valuation, however, appears to be on the higher side. Serco's acquisition cost represents a multiple of around 12 times EBITDA for the year to March 31, 2011. Nikhil Rajpal, partner, private equity practice, Everest Group, said, this deal is on the expensive side considering that Intelenet has a lot of low-margin India business.
The buyout is part of the £4.3 billion Serco's strategy to gain a larger exposure to higher-growth overseas BPO markets. Serco made an investment about two years back in an India-based company called InfoVision, which is now called Serco BPO. Serco BPO, which has about 8,000 people, provides customer services, database management and back office services for only the Indian BPO market. Intelenet has an employee base of 32,000 with about 75% of revenues coming from international business and 25% from domestic business. Their combined BPO operations will have 40,000 employees providing services across seven countries.
The combined entity is a strategic fit for Intelenet as it adds significantly to its consulting and technology capabilities. The vision is to become a complete player offering consulting to front line services to middle and back office and technology, said Susir Kumar, chief executive of Intelenet Global Services.
Analysts say that the BPO industry will see more consolidation, as clients prefer vendors who can provide end-to-end capabilities with stronger domain expertise. Smaller players should either gain scale through consolidation or acquire expertise in niche areas, said Kumar.
The buyout is part of the £4.3 billion Serco's strategy to gain a larger exposure to higher-growth overseas BPO markets. Serco made an investment about two years back in an India-based company called InfoVision, which is now called Serco BPO. Serco BPO, which has about 8,000 people, provides customer services, database management and back office services for only the Indian BPO market. Intelenet has an employee base of 32,000 with about 75% of revenues coming from international business and 25% from domestic business. Their combined BPO operations will have 40,000 employees providing services across seven countries.
The combined entity is a strategic fit for Intelenet as it adds significantly to its consulting and technology capabilities. The vision is to become a complete player offering consulting to front line services to middle and back office and technology, said Susir Kumar, chief executive of Intelenet Global Services.
Analysts say that the BPO industry will see more consolidation, as clients prefer vendors who can provide end-to-end capabilities with stronger domain expertise. Smaller players should either gain scale through consolidation or acquire expertise in niche areas, said Kumar.
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