EDS, TCS in race for Phoenix's BPO

By siliconindia staff writer   |   Tuesday, 13 April 2004, 19:30 IST
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MUMBAI: EDS , one of the world’s largest outsourcing services companies, and Tata Consultancy Services, Asia’s biggest software services firm, are in the race to buy US insurance giant Phoenix’s 100 per cent stake in its Bangalore-based BPO outfit Phoenix Global Solutions, industry sources said. EDS, which already has a large operation in the country, is believed to be conducting due diligence of the outfit’s operations and financials. “They are close to it, but TCS is also there,” the sources said, adding that EDS may well pip the Indian software giant and clinch the deal. The development comes in the wake of consolidation in the domestic BPO industry, sparked off last week by IBM’s acquisition of Daksh , the Gurgaon-based BPO firm. Global companies eager to acquire capacities to take advantage of the boom in outsourcing are targetting small and medium-sized firms, who lack financial muscle to withstand competition. The outsourcing industry is worth about $3.5 billion and is growing rapidly, as more and more foreign firms send jobs overseas to take advantage of cheap labour. Though the clamour against outsourcing has become a politically sensitive issue, ahead of the US presidential elections, analysts say that outsourcing is very much a reality and cannot be stopped. They estimate that about 3.3 million service sector and high-tech jobs, about 2.2 per cent of all the jobs in the US, may be outsourced by 2015. A study by Ashok Deo Bardhan and Cynthia Kroll of the University of California at Berkeley, estimates that about 14 million jobs are under “outsourcing” risk. Analysts say, this means that US companies, wanting to corner a slice of this pie, need to have adequate capacities in India. Both EDS and TCS have been trying for M&A deals in recent times. Both companies have bid for buying News Corp’s stake in Hughes Software, while TCS is also a bidder for acquiring a portion of General Electric’s call centre business in the country. Phoenix Global Solutions has a turnover of about $14-15 million and is fully owned by the US-based financial services giant, based in Hartford, Connecticut.