Consolidation in the BPO space

• Indian Rayon acquires Transworks  

Indian Rayon, an Aditya Birla Group company, has forayed into the BPO space with the acquisition of TransWorks. The value of the deal is estimated at about US$13 million.  

TransWorks, which has delivery centers in Mumbai and Bangalore , was the world's first COPC (Release 3.2) certified company. Funded by venture capital firm ChrysCapital, TransWorks has a current revenue run rate close to US$ 1 million per month and employs about 1,000 professionals.  

• Perot Systems acquires Vision Healthsource  

Perot Systems has acquired BPO service provider Vision Healthsource for US$ 10 million. Of this, US$ 3 million is in cash and the additional US$ 7 million is to be paid if certain performance targets are met by 2006. The second part of the transaction deal has been inserted to sustain the interest of the current team in the management of the company. The current turnover of the company is US$ 2.4 million.  

Perot Systems has operations in the US focused on the payer’s side. Therefore Vision’s business model of offering services to the provider community perfectly compliments Perot’s existing model. Besides, Perot Systems has a strong onshore model while Vision Healthsource has a sound offshore model.  

• TCS acquires AFS  

TCS acquired Airline Financial Support Services India Pvt Ltd (AFS), a business process outsourcing outfit, by buying out Swissair's stake of 75.1 per cent in AFS, in which it owned 24.9 per cent.  

Formed in 1992 as a captive BPO arm of the airline to perform revenue accounting services, AFS was a joint venture of Swissair (holding 75.1%) and Tata Sons Ltd (holding 24.9%). AFS currently employs 400 personnel. AFS offers a range of services including airline revenue accounting services, traffic accounting, cargo revenue accounting, passenger interline billing, navigation support, level 1 h/w support, and frequent flyer programme administration.  

AFS is poised to offer its services not just to the airlines, but also to the broader spectrum of companies in the hospitality industry. Some of its other customers include Swissair, Tyroclean Airlines, Sabena, Austrian Airlines, Lauda Air, Malmoe Aviation, Loyalty Gate and Unit Pool.  

Acquisitions in the IT software services space

• TCS close to US buy

Tata Consultancy Services is close to buying-out a US-based company. The company has short-listed three US firms with revenues between US$ 40 million and US$ 100 million. These acquisitions are targeted at augmenting its technology in specific verticals such as banking and financial services and manufacturing. The acquisitions are also aimed at enhancing the capabilities in the BPO space. 

• Hughes Software Systems acquires Tenet Technologies

The Rs. 240 crore Hughes Software Systems has acquired Bangalore-based Tenet Technologies in an all-cash deal for Rs. 18 crore. The acquisition is aimed at assisting HSS in leveraging the existing and new clientele in the telecom space in Japan , the second largest market after the United States . With currently eight percent of the total revenues coming from the Japanese market, Hughes is looking at doubling its revenue share from the Japanese market in two years. Tenet has wholly-owned subsidiaries in Japan , the UK and US.  

Tenet had registered a turnover of Rs. 21 crore with a profit before tax of Rs. 3.7 crore in 2002-03. The company, with an employee strength of 95, has an asset base of around Rs. 9 crore. In fiscal 2003-04 Tenet is expected to generate revenues of Rs. 28 crore with profit after tax of over Rs. 5 crore.

Acquisitions in the IT software product space

• Peoplesoft to acquire J. D. Edwards

PeopleSoft Inc. has announced plans to acquire Denver-based J.D. Edwards & Co. in a transaction valued at approximately US$ 1.7 billion. The acquisition will mean that the combined companies will share 13,000 employees, more than 11,000 customers in 150 countries and US$ 2.8 billion in annual revenues.

This acquisition enables Peoplesoft to take full advantage of what J.D. Edwards can offer in the areas of manufacturing and distribution to asset-intensive industries. From J.D. Edwards perspective, this deal would help the company move up-market, a goal it has expressed for some time in areas where they've dev eloped some industry expertise like construction and real estate.  

Indian companies getting into bigger league  

TCS has achieved the distinction of being the first Indian company to cross the US$ 1 billion mark. Its current employee strength stands at around 25000, of which nearly 5000 are deployed onsite. TCS, Asia´s largest software and services consulting company, is now aiming at achieving the US$ 10 billion mark by 2010.  

Recent deals

•   IBM says wins $801 million contract from California Department of Child Support Services

IBM has won an $801 million, 8-year contract from the California Department of Child Support Services to build a computer system to track child support payments. This involves building, operating and managing the system, to be known as the California Child Support Enforcement system.  

Accenture Ltd. and American Management Systems Inc. will serve as subcontractors on the project. American Management Systems will help convert records from the computer system, and Accenture will design and build the new system.  

Focus on Wi-Fi technologies - Intel Buys Stakes in 3 Asian Companies

Intel Corp., the world's largest chip maker, said its $500 million Intel Communications Fund has bought minority stakes in three Asian companies as part of its efforts to promote the use of wireless fidelity, or Wi-Fi technologies. The companies in which it purchased stakes are South Korean network solution provider IPone Inc., Chinese infrastructure technology firm Ocamar Technologies and Indian solutions provider Pronto Networks. Financial details weren't disclosed. The investments are the first by Intel Communications Fund, set up in September 1999, in Wi-Fi companies.