British services firm Serco Group announced that the company has acquired a 60% stake in India’s largest domestic business process outsourcing (BPO) outfit InfoVision for 13.3 million pounds (US$20 million). The new entity to be named Serco BPO plans to add 5,000 new hires in India by the end of 2009.
UK-based Serco, recently promoted to the FTSE 100 stock index, will buy the remaining 40% over the next two years at a price to be determined by InfoVision’s financial performance over the period.
Infovision currently employs about 10,000 staff in 7 regional offices across India and it is the third-largest BPO firm catering primarily to the Indian local market. The company provides customer services, database management and back office support and its major clients include HSBC, GE and AMEX.
In the year to 31 March 2008, InfoVision’s revenues totaled £23.5 million and Serco is targeting 30-50% annual revenue growth for its Indian business in the longer term.
India’s outsourced domestic BPO market has been gaining impetus and is projected to grow to more than US$10 billion by 2012. From less than $100 million in 2002, domestic BPO demand grew to $1.1 billion last year.
A study by the National Association of Software and Services Companies of India (Nasscom) and the Everest Group estimates that the domestic BPO segment has grown faster than the overall Indian BPO industry to reach between $1.6-1.8 billion by end of FY2008, against an overall BPO revenue of $11 billion.
Large BPOs like Genpact, Infosys, Intelenet and Aegis, traditionally focused on the international market which is now faltering, have started to build up their domestic BPO divisions in offering process efficiency (“India for India“) and aim to expand operations. Net margins for domestic as well as international BPO work can be quite similar at 12-15%, reported the Economic Times, thereby making the former more attractive.
Serco will offer InfoVision’s domestic and international service offerings to its international customer base, in addition to developing new BPO services. 90% of its current business is with the public sector in 35 countries. Serco delivers service solutions in sectors as diverse as rail and air traffic management, defence, health and education. It also has a subsidiary in India with over 700 staff delivering finance, payroll and IT-ITes services.
The InfoVision acquisition by Serco was preceded by the US$505-million TaTa Consultancy Services buyout of Citigroup Global Services arm and WNS Holdings acquiring Aviva Global Services, outsourcing arm of insurance major Aviva, for $228 million.
