IBM debuts in BPO with Daksh

Making a debut in the business process outsourcing (BPO) space, IT major IBM has announced plans to acquire Daksh eServices, a BPO company based in Gurgaon near Delhi.

This is one of the first ever acquisition deal of this magnitude, where a US company is buying out an Indian BPO player. Though both IBM and Daksh were mum on valuation, market sources estimate the deal to be worth around Rs 700 crore. CDC (now known as Actis), Citigroup and General Atlantic Partners together hold 65 percent in the BPO company. The remaining stake in Daksh was held by the promoters. The sources said that Citigroup advised IBM on the deal. According to an IBM press note, the transaction is expected to close in May 2004 and is subject to Indian regulatory approvals.

The deal will enhance IBM’s business transformation capabilities in areas including customer relationship management and financial management services such as banking, insurance, retail, technology, telecommunications and travel.

This initiative will increase the scope of IBM’s global network of 22 business transformation delivery centres in the US and 12 other countries. Daksh eServices has BPO centres in Delhi, Mumbai and Philippines with offices in the United States of America and UK. The BPO company has a total headcount of over 5,000 people and till recently its chief executive officer Sanjeev Aggarwal was talking of an additional 4,000 people by 2005.

Aggarwal and the IBM spokesperson were not available for comments. The other largest BPO acquisition deal in India in the recent past has been of Spectramind by Wipro in 2002 for Rs. 470 crore.

National Association of Software and Service Com-panies president Kiran Karnik said, “The IBM-Daksh deal validates the robustness of the global delivery model for services. It signifies the coming of age of India as the preferred destination for offshore services. The deal also signifies the need for scale in the BPO market. However, there is substantial evidence from global markets that there is room for large and small players.”

Analysts from Gartner and Frost & Sullivan also see this as an example where the Indian BPO industry has been able to prove its robustness.

ZDNet India