Indian BPO company buys PeopleSupport

MANILA, Philippines - Aegis BPO, part of India’s $50-billion Essar Group conglomerate, has agreed to buy California-based outsourcing firm PeopleSupport, Inc. in a $250-million deal that is expected to boost the former’s overseas expansion. Rainerio M. Borja, president of PeopleSupport (Philippines) Inc., said in a briefing yesterday that the deal will combine both firms’ strengths. "We are stronger in voice services than any Indian BPO company, while Aegis BPO is strong in such services as software development, where we are weak," Mr. Borja said. Aegis BPO, a unit of Essar Group, which is into steel, energy, communications, shipping and construction ventures in the US, the Caribbean, Canada, Africa, the Middle East and Asia, agreed to pay to pay PeopleSupport stockholders $12.25 a share, 29% more than the closing price last August 1. The deal is expected to be completed in the third or fourth quarter of this year. PeopleSupport will be delisted from the Nasdaq, and the new company will be called Aegis PeopleSupport, a wholly owned subsidiary of Aegis BPO, Mr. Borja said. Mr. Borja said his company will continue its plans and that there will be no change in management until completion of the deal. He said that, for the meantime, PeopleSupport will continue its local expansion and hopes to build a 500- to 750-seat office in Baguio by the fourth quarter, adding to the 7,000 seats in six existing sites in that city, Makati and Cebu. He said there are no plans of expanding to other cities, for now. Data of the Business Processing Association of the Philippines (BPA/P) last July ranked PeopleSupport eighth in terms of full-time employees. PeopleSupport posted a second-quarter net loss of $1.3 million compared to last year’s $3.9 million net income. In a statement, it attributed the loss to increased cost of facilities, employee compensation, and peso appreciation. Besides the Philippines, it has 500 seats in Costa Rica. BPA/P President Danilo Reyes said in a separate interview yesterday that such transactions are part and parcel of a growing industry. He said consolidation among outsourcing firms is not a new development, and that expansion of service portfolio is a positive move. Aegis BPO employs over 20,000 people in 25 facilities worldwide and has annual revenues of over $320 million, a statement on the deal read. — Don Gil K. Carreon, BusinessWorld