HGS to buy part of Mphasis' domestic BPO

Hinduja Global Solutions (HGS), the business processing outsoursing (BPO) arm of diversified business conglomerate Hinduja Group, said on Tuesday it has signed a definitive agreement with information technology (IT) services company Mphasis to acquire a significant portion of its domestic business for Rs 17 crore.

While the acquisition cost looks paltry considering 7,000 employees with five clients - mostly in telecom and financial services sectors - will move to HGS as part of the transaction, experts tracking Mphasis say it could be part of the latter's strategy to reduce exposure to non-core segments and cut flab.

For HGS, which currently derives eight per cent of its revenues from India, the transaction is expected to give the company a strong foot-fold in the domestic market, giving it six additional delivery centres located across six cities.

The acquisition is also expected to strengthen its offerings in the telecom, and banking and financial services space.

"We see an environment of bullishness in India where companies are getting back into investment mode and looking for ways to enable higher growth," said Partha DeSarkar, CEO, HGS.

"This acquisition adds scale and a wider footprint even as we enhance our capabilities and gain an outstanding team of domain specialists to cater to our clientele," DeSarkar added.

In FY15, HGS reported Rs 2,807.58 crore in revenues, an increase of 12 per cent over the previous financial year, while its net profit declined 2.6 per cent at Rs 165 crore.

After the completion of the transaction, the share of India market for the company is expected to grow to 10 per cent from eight per cent now.

Mphasis, which majority-owned by Hewlett-Packard (HP) is heavily dependent on the latter for its revenues, though the Bengaluru-based company is seen aggressively growing its direct business.

The deal assumes significance as sources say HP is looking at exiting the company after selling the stake.