UK firm Serco buys Mumbai-based Intelenet BPO

UK based Serco Plc will buy out Intelenet, one of India’s bigger independent BPO companies with an employee strength of around 32,000, for up to £385m (Rs 2,500 crore), the Mumbai-based firm said. Around £50 million of the payment will be conditional on meeting milestones.

Intelenet Global Services, started by TCS (Tata Consultancy Services) and HDFC (The Housing Development Finance Corporation) ten years ago, is now majority owned by the US-based private equity firm Blackstone Group, along with minority partners Barclays, HDFC and Intelenet’s management team. TCS exited the company at the time of a ‘management buyout’ in 2007.

Serco is an extremely diversified company with nearly £4.4 billion in revenues and is present in a large number of industries in Britain, including Transport, Science, Jail, Defence, Aviation, Health Education, Leisure, Publishing and other government services such as issuing drivers’ licenses.

It said it is buying the business as a play into the BPO business, rather than for internal use.

“The international BPO market is growing quickly as companies seek out new ways to improve their service and reduce costs. Intelenet’s high value capabilities and customer base, together with its economies of scale, means we can access new markets and strengthen our existing propositions,” said Chris Hyman, Chief Executive of Serco.

It is primarily a services-focused company and provides services in these areas, primarily in Britain.

Intelenet has 34 centres in seven countries and offers “middle and back office services” such as voice support, finance and accounting services, and business transformation consulting such as process redesign and reengineering.

Around three-quarters of its revenues are generated from international BPO, with the remainder from the domestic Indian business. Intelenet has an order book of around £500m over the next five years.

Intelenet’s revenues for the year to 31 March 2011 were approximately £170m.

“Revenues have grown organically over the last three years at a compound annual growth rate of 12%. Intelenet’s Adjusted operating profit for the year to 31 March 2011 was approximately £19m. The Adjusted operating profit margin* has averaged 12% over the last three years,” Serco told its investors, adding that it expected Intelenet to continue achieve organic annual revenue growth of 10% to 15%.

“Becoming part of Serco will propel us to our next phase of growth, by helping us to address a wider market and to provide more end-to-end solutions. My management team and employees keenly look forward to working with our new global colleagues,” said Susir Kumar, Chief Executive of Intelenet Global Services.