home page 






 BPO in Financial Sector    intro | overview | opportunities | major players | news| call center

India’s IT/BPO Market Will Grow At 30% For 4 Yrs- ASSOCHAM

After registering an CAGR growth rate of 35% in last couple of years, Indian IT/BPO industry is expected to continue to grow over 30% on a year-to-year basis for at least another four years, according to Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The Chamber in a statement stated that Offshoring is now a proven formula, which has enabled in particular Tier 1 (TCS, Infosys and Wipro) but also Tier 2 Indian players to grow at a much faster pace than their global peers (e.g. IBM, Accenture, EDS, CSC, Fujitsu, Cap Gemini and Atos Origin). As a result Indian players having been gaining market share at expense of Western based players.

Over the years most of the Indian IT Services and BPO players have been moving up the value chain and in most cases are integral to the business of the client. Considering this positive outlook towards Indian IT/BPO service industry, PE/VC investors are looking at investing in these companies to be part of India growth story.

Besides investing in main stream companies, investors are increasingly looking to invest in companies with niche focus such as Flextronics Software System (specialized IT services in telecom domain), Geometric software (engineering services CAD/CAM/CAE), Applabs (software testing), Quattro (BPO firm focusing on new offering such as legal outsourcing, analytics, clinical data management etc), according to assocham.

Some of the key deals that have happened in this space are: (Value in USD mn & Investors Profile) Carlyle Group (170, BPO), Chryscapital UTI Ventures (28, Networking & System integration), IDG Ventures India (2.0, Business Intelligence & analytics software product), Cargill Ventures (9.0, IT services), UTI Venture, Argonaut (10.0, Web application, mobile computing & entp. infrastructure management), Norwest Venture (20, financial services, KPO), Carlyle Group (20, Integrated solutions provider across the spectrum of publishing & data services), Olympus Capital (100, BPO), Intel Capital, Trident Capital, Cargil Ventures & Jafco (11, IT infrastructure management & consulting services), Baring Private Equity Partners (10, Global sales, business intelligence & marketing analysis company), Carlyle Group (17, Pure play, third party BPO company offering both voice & non-voice services), Sequoria Capital (10, Software Testing), Oak Investment Partners (30, IT Professional services, Outsourcing IT services, IT offshore services, IT consulting firms), WestBridge Capital Partners (12.5, Offshore Product Development), Kohlberg Kravis Roberts & Co. (900, IT services company), ICICI Venture Funds (10, IT services company with focus on CAD/CAM/CAE), ChrysCapital LLC (15.1, Supply Chain Management), General Atlantic Partners (67.5, Specialised ITS & BPO provider) and Softbank Asia Infrastructure Fund (22.5, Offshroe Product Engg.).

Across all sectors Venture Capital VC/PE firms obtained exit routes for their investments in 37 Indian companies during 2006, including 19 via IPO’s. For 2005 this figure stood at 41, including 17 via IPO’s. Obviously exits are always lagging investments and given that as little as 2 years ago total PE investments was well below 100 per annum this by and large explains the big difference between total number of investments in 2006 and total number of (disclosed) exits.

In large M&A exits, one transaction which grabbed attention was the acquisition of 52% stake in Mphasis-BFL by EDS for US$ 380 mn. Baring Private Equity Partners realized about US$170 mn by selling a 23.38% stake in the company (it continues to retain a 15% stake and Baring Private Equity Partners is estimated to have made 25x return on its investment)

Another trade sale which attracted quite a bit of attention was the US$ 250 sale of Office Tiger to RR Donnely which enables RR Donnely to significantly increase its BPO/Document management exposure

US$ 224 mn IPO of WNS global services (India based BPO service provider) on NYSE was the largest PE backed IPO during 2006. Warburg Pincus acquired 68% equity in WNS in 2002 via partial buyout of British Airways stake. In the IPO about 60% consisted of secondary sale by exiting shareholders.

In the form of exit where one PE/VC sells to another PE/VC, Baring Private Equity Partners exited from Cybernet Software System and its subsidiary Slash Support by selling it stake to SAIF for US$ 21 mn

In a large buyback exit route, Citigroup sold its 23% stake in Progeon (BPO service provider) for US$ 115 mn to its parent, Infosys. Citigroup invested US$ 20mn in 2002, thus making a return of about 5.7x on its investment over 4 years.


Click Here


Advertise | Events | Advertise | Book Store | About us | Contact us | Disclaimer

©copyright   No part of the contents can be reproduced in any manner whatsoever without permission in writing from Banknet India