Hinduja Global Acquires Stake in Mphasis’ BPO Unit in India

Hinduja Global Solutions (HGS), the business process outsourcing (BPO) unit of the business conglomerate Hinduja Group has entered into a definitive agreement with Mphasis, a leading IT service firm based in Bangalore, and its wholly owned subsidiary MsourcE India Pvt. Ltd. to acquire a significant portion of their domestic BPO business.

HGS finalised the deal for Rs. 17 crore ($2.7 million). HGS informed that it has bought about 60% of India business of Mphasis.

hinduja global solutions

What does this acquisition mean for HGS?

HGS is ranked 9th among India’s business process management (BPM) companies. The company currently obtains 8% of its revenues from India. The acquisition of Mphasis is expected to boost the company’s India revenue and increase the share of India market for the company from 8% to 10%. It is expected that five new clients will join HGS’s existing client base.

As per a statement issued by Partha DeSarkar, chief executive officer of HGS, the acquisition is opportunistic and fits well into the growth plans of the company. Though the deal is for 17 crore, HGS is expected to derive Rs. 140-160 crore in revenue. The acquisition of new clients and new processes will help the company to look to leverage for the international market.

How will the acquisition influence HGS’ presence in the Indian market?

The acquisition will reinforce HGS’ presence in the domestic market of India. As a result of the acquisition, HGS will add newer service capabilities and marquee clients in the telecom and banking and financial services (BFS) verticals. It will also have access to a large pool of customer experience professionals of Mphasis.

HGS said that it will add Mphasis’ 7,000 employees and seven BPO delivery centres servicing telecom and banking-financial services-insurance (BFSI) sectors to its fold through this acquisition.

The seven delivery centres of Mphasis are located across six cities in India, namely- Noida, Raipur, Indore, Mangalore, Pune and Bangalore.

What does this deal mean for Mphasis?

Mphasis is majorly owned by the global tech major Hewlett-Packard (HP). Mphasis depends heavily on HP for its revenues, though it is increasing its efforts to expand its direct business. HP has 60.45% stake in Mphasis. The tech major has been trying to divest its stake in Mphasis for a few years now, but has not been successful to finalise a deal.

This transaction with HGS carries much significance for Mphasis.

The CEO of Mphasis, Ganesh Ayyar said, “I am very happy to see that with this agreement, Mphasis will further intensify focus in Digital, Governance Risk and Compliance (GRC), Application Maintenance Services (AMS) and Infrastructure Services (IS). HGS’ specialisation will bring excellent value to the in-scope domestic clients and employees in India,” said

How does this deal affect Mphasis employees?

Elango R, chief human resources officer and head of emerging geographies business unit of Mphasis [stock quote] said that the deal will not lead to job loss or headcount reduction for Mphasis employees. He informed that a dedicated unit has been set up to ensure smooth transfer for all employees. He further added that the Mphasis employees have found a new home in HGS and will play a pivotal role in augmenting their India footprint.

Other acquisitions by HGS

There have been other acquisitions by Hinduja Global Solutions [stock quote] in the last few years.

In March 2015, the company acquired 89.9% stake in Colibrium. Colibrium is a US-based sales automation and CRM solutions provider in the health insurance sector. In 2012, HGS acquired healthcare revenue cycle outsourcing business EBOS (Extended Business Office Solutions) from Deloitte Consulting LLP and Deloitte Consulting Extended Business Services LLC.

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