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Updated: June 1, 2011 00:03 IST

Serco buys BPO firm Intelenet for £385 m

Special Correspondent
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Susir Kumar
Susir Kumar

Serco, the international service company, on Tuesday signed an agreement to acquire Mumbai-based Intelenet Global Services Private Ltd. (Intelenet), a leading provider of business process outsourcing (BPO) services to the private sector and in the domestic Indian market, for 385 million pound sterling.

Serco is a FTSE 100 listed company, supporting governments, agencies and companies. It offers operational, management and consulting expertise in the aviation, BPO, defence, education, environmental services, facilities management, health, home affairs, ICT, knowledge services, local government, science and nuclear, transport and the commercial sectors.

The acquisition cost of 385 million pounds (Rs.2,770 crore) includes contingent payments of up to 350 million pounds, and will be fully funded from Serco's debt facilities. The expected funding cost will be around 5 per cent. Transaction costs charged in the first year will be about 3 million pounds with similar integration costs over the first and second year. Following the initial integration, net cost synergies are expected to grow to 35 million pounds per year, driven by the integration.

Addressing a media teleconference, Sudhir Kumar, Chief Executive of Intelenet Global Services, said, “Becoming part of Serco will propel us to our next phase of growth, by helping us to address a wider market and to provide more end-to-end solutions. The management and organisation will remain in place and I will continue as CEO while Thomas Ryan, Senior Director, Serco Group, has been appointed as Executive Chairman of Serco's BPO division. As of now, there is no decision on rebranding the company”.

This acquisition is in line with Serco's strategy focussed on organic growth, supplemented by strategic acquisitions of skills and capabilities to enter new markets and sectors. The acquisition will add to its scale and depth of capabilities. “Together with our existing BPO-related operations we will have around 40,000 employees making us strongly placed to provide customers a broad range of end-to-end business services,” said Thomas Ryan, Executive Chairman, Serco BPO.

Chris Hyman, Chief Executive of Serco, said: “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”.

The addressable global BPO market is estimated at $350-500 billion, according to the Everest Research Institute. Around $200 billion of this is currently outsourced, with $40 billion being provided internationally with a forecast to grow 15 per cent annually. International BPO in India represents around $15 billion or 32 per cent of the market.

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