Mergers and acquisitions were the flavour of the Indian BPO industry in 2011. Organic growth was a bit sluggish due to uncertain global macroeconomic conditions. Ironically, more acquisitions were made reportedly for the same reason. Valuations were low and hence fair amount of consolidation happened in the industry during the year.

Some of the big-ticket acquisitions included Serco’s buyout of Intelenet, Genpact’s deal with Headstrong and Capita’s acquisition of Ventura. Most of the companies going the M&A way intended to enhance their current capabilities and markets. However, some instances such as Genpact’s acquisition of EmPower Research and Headstrong and Xerox (ACS) acquiring Innova Consulting indicated decisions that were based on the anticipated market demands, says Deepali Sathe, research analyst and manager, projects, ValueNotes Sourcing Practice.

“M&A in 2011 indicated aggressive growth plans. Another aspect that made news is spate of multiple acquisitions. Many companies acquired multiple targets in a single year. Aegis has acquired more than 15 companies in five years. This year has been no different, with the company acquiring sister companies Dubblera and Smicker and Clickthinking Online. There is a two-fold strategy behind these acquisitions, verticalisation of solutions and tapping new geographies,” she adds.

Apart from multiple acquisitions, what made news this year was the sizes of the deals. Intelenet’s acquisition was the largest deal in the BPO space to date, priced at about $600 million. Genpact acquired Headstrong at about $550 million.

According to NASSCOM, India has 37 per cent share in the global BPO market with over 500 companies operating in the country. Close to 200 companies are multinationals and captives doing work out of India. The industry serves 66 countries in over 35 languages. Total BPO revenues are projected to be $16.9 billion by the end of this fiscal. The domestic BPO market has been growing at about 20 per cent and may reach $2.5 billion in 2014, says Gartner.

shyamalaseetharaman@mydigitalfc.com