Aegis acquires Sri Lankan outsourcing company

Aegis acquires Sri Lankan outsourcing company

Mumbai: The $500 million (Rs2,375 crore) business process outsourcing (BPO) services arm of the Essar group, Aegis Ltd has made its 14th acquisition in five years by buying an 80% stake in Sri Lankan BPO firm iSmart Timex Pvt. Ltd for an undisclosed amount. The purchase was done through Essar Services Holdings Ltd, the holding company of Aegis.

Aegis chief executive Aparup Sengupta said the latest acquisition, which was funded through internal accruals, was in line with the firm’s plan to expand its global reach and “inch towards" becoming a $1 billion company in two-three years.

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Besides India, Aegis is present in the Philippines, the US, Costa Rica, Kenya, South Africa, Australia and now Sri Lanka. It has 39,000 employees globally and a client base of 130 global clients, including 32 Fortune 500 companies.

Mid-sized BPO companies such as Aegis need to increase their size and reach to be able to compete in the industry, analysts say. Consolidation is expected to continue among such companies “as they will find it hard to survive without the benefit of scale and access to new markets", said Abhijeet Ranade, associate director at global consultancy PricewaterhouseCoopers.

With the latest acquisition, Aegis will now offer services from 35 delivery centres across the world. Aegis, which was acquired by the $17 billion Essar group in 2004, had in July spoken of plans to acquire four firms a year as it works towards its target of becoming the world’s most profitable back-office services firm by 2012.

“Besides the existing client base of iSmart, we are also excited about the prospective clients we will get through this acquisition," Sengupta said.

The balance 20% of iSmart continues to be with Timex Garments Ltd, the Sri Lankan business group of which iSmart Timex was a part. “We wanted to have a local partner to navigate the domestic market there and the parent company was willing to partner with us," Sengupta said.

Aegis is looking at another acquisition, in the European market, in the next four months, Sengupta told Mint.

The unlisted Aegis does not disclose its earnings, but according to numbers revealed at an event hosted by industry body Nasscom, or National Association of Software and Service Companies, the firm’s profit for 2009-10 would be at least $100 million.

Graphics by Yogesh Kumar / Mint