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April 7, 2004

IBM GS acquires Daksh eServices

IBM Global Services has made its first acquisition in the Indian offshore market, acquiring India's third largest business processing outsourcing firm Daksh eServices Pvt Ltd.

By CBR Staff Writer

Armonk, New York-based IBM GS paid a reported INR 7bn ($161m) for Gurgaon-based Daksh, which employs 6,000 people in call center and back-office support services. The company is majority owned by investment groups General Atlantic Partners, Actis, and Citigroup, with the founders holding a minority stake. According to IBM, the operation will be pooled in to the IBM Business Consulting Services division, which employs around 60,000 people, and was built up through the $3.5bn acquisition of PwC Consulting in October 2002.

Daksh ranks behind number-one provider GE Capital International Services (with 12,000 employees), and Wipro Spectramind (10,000). However, it remains ahead of fourth place vCustomer (3,500) and fifth largest player 24/7 Customer (3,000).

Daksh operates across five facilities in India and a new location in Manila, Philippines. It provides call center outsourcing services around inbound and outbound calls, email for customer service and fulfilment, chat services for customer care and technical support, and back-office support services for transaction processing, which covers research and analysis, claims processing, payroll, accounts, and application processing for 10 clients including Sprint, Citimortgage, and Amazon.com.

Daksh, which made revenue of $29m in 2003, had been pursuing a fast growth strategy with plans to make an initial public offering that it hoped would raise between $100m and $150m to fund its growth plans to reach a headcount of 10,000 people by 2005.

This is the first sizable acquisition IBM GS has made since PwC Consulting, which gave IBM GS a strong skillset in BPO services around human resources outsourcing. This enabled the company to win its first major deal in the sector in January 2004, a $400m 10-year global agreement with Proctor & Gamble that will see IBM GS support nearly 98,000 P&G employees in close to 80 countries, provide payroll processing, benefits administration, compensation planning, expatriate and relocation services, travel and expense management, and HR data management.

Following the takeover, IBM will employ approximately 10,000 people in India, of which 4,000 will deliver a range of software development and IT services for its global client base, with 6,000 in BPO services.

This article is based on material originally published by ComputerWire

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