Aegis to acquire Bharti's TeleTech

Aegis business process outsourcing (BPO), an Essar Group company, has signed a share purchase agreement to acquire Delhi-based TeleTech Services "� a joint venture between TeleTech Europe and Bharti Ventures. The all-cash acquisition is valued at $13 million (around Rs 50 crore).

This is the seventh acquisition in the last two years by Aegis, further strengthening the argument that BPO subsidiaries of manufacturing companies can no longer be dismissed as captive units lacking any service culture.

For instance, Hero ITES, the Rs 400 crore BPO subsidiary of the two-wheeler company Hero group, acquired Scotland's biggest BPO Telecom.

Also, Aditya Birla Nuvo group's BPO arm Aditya Birla Minacs (formerly Transworks), sprang into action after its acquisition of Canada-based Minacs for $125 million.

Moving ahead, Aegis BPO is planning acquisitions in Europe and south-east Asia, besides India and the US. TeleTech is expected to add $15 million to its revenues in the first year.

Aegis employs close to 14,000 employees. The acquisition will add over 2,000 people to Aegis and also bring Bharti Airtel, a leading mobile company, into its portfolio. The company expects to increase its headcount to 25,000-30,000 in the next 2-3 years.

Bharti executives, on condition of anonymity, said they were exiting the BPO business since it "was no longer a strategic fit".

Bharti Ventures in 2003 had said it was looking at a pan-India presence with the BPO. However, TeleTech was focused on the Philippines, which provided better labour arbitrage. This was another reason that prompted Bharti to exit the business.

Aparup Sengupta, CEO and MD, Aegis BPO, said, "We are looking at organic and inorganic growth to reach our target of $500 million in revenue in the next two years from $188 million currently. Our M&A team is working in the area of acquisitions. The acquisition will primarily cater to our foray into new geographies."

Some of the locations under consideration are Spanish speaking countries and the Philippines, and Vietnam in south-east Asia.

Currently, telecom is the largest contributor to Aegis' revenues with a share of 40 per cent, followed by BFSI with 20 per cent and healthcare contributing about 10-12 per cent.

Geographically, the US constitutes 60 per cent of the company's revenue and the remaining comes from India.