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Indian BPOs mulling mergers, acquisitions

by: Ronald Escanlar

Friday, February 25, 2011 | Outsourcing News |

Traditional BPO vs Integrated IT-BPO Players

The professional clash between pure BPO companies and integrated IT-BPO players is coming to a head, as rumors swirl in the large Indian outsourcing industry of mergers and acquisitions among pure play BPO firms.

The Hindu Business Line interviewed outsourcing experts to share their views about these M&A rumors. “I think it is more about speculation and investment horizon of PEs and less to do with performance of a sector or even integrated versus pure play BPO debate,” comments Sid Pai, managing director of outsourcing consultancy TPI India.

“Theoretically, it is rare for PE (private equity) firms to stay invested in companies for very long, and so naturally, when there is a recovery in valuations they may mull an exit,” Pai explained.

Nikhil Rajpal, partner at Everest Group, shared the same opinion. “I do not think it reflects any preference for an integrated approach at all. From an industry point of view, in companies where PE firms are invested in, there is generally an investment lifecycle. So 5-8 years is, typically, seen as a right maturity time for them to exit or cash out.”

On the other hand, Keshav R. Murugesh, group CEO of WNS, argued that buyers in the market for IT and BPO services were different clients. “We have gone for a vertical approach where we have people with deep domain knowledge, speaking to clients. As opposed to that there are integrated players, predominantly IT players for whom BPO is just a fraction of the business,” he argued.


Source:
www.thehindubusinessline.com

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