Telco-focused offshore IT/BP player Tech Mahindra has emerged as the buyer of Hutchison Global Services (HGS), the captive BPS division of multinational telco Hutchison Whampoa. It emerged that Tech M and Serco had both been interested in acquiring the business back in July (see Tech M and Serco considering Hutchison BPO captive).
Tech M will pay $87.1m upfront for HGS, which is a customer management business employing over 11,500 people in Mumbai and Pune, providing services to the Three network in the UK and Ireland (part of the Hutchison empire), and Vodafone in Australia. As part of the deal, HGS’ clients will buy services worth $845m over a 5 year period from HGS, and they have agreed to HGS being their exclusive provider of certain services in India. The deal also apparently builds on an existing IT relationship between Tech M and Hutchison across multiple countries.
Tech M is getting a good deal - effectively paying a price sales ratio of 0.5x committed annual revenue for HGS. It also marks a new chapter in the company’s coming of age following last week’s decision by former JV partner BT to sell 60% of its remaining stake in Tech Mahindra (see BT sells stake down Tech Mahindra stake). Next of course is the long-awaited nuptuals with sister company Mahindra Satyam (see here).
The HGS takeover will be a disappointment to Serco, since it has been aggressively building up its offshore BPO capability (see here), and would have seen HGS as a way to further boost its customer service operations in the UK telecoms sector - Three after all has 8m customers in the UK. Meanwhile, the prize goes to Tech M, which should see this as a great platform from which to bulid out its footprint in the UK market.