Offshore Market Consolidation Trends

How is the offshore BPO market consolidating? There has been a spate of mergers and acquisitions (M&A) in the BPO space. Given the tough capital markets situation, the IPO window isn't open for many offshore vendors looking for funds. M&A may be a key to survival, but it isn't a quick fix. Expect a period of turbulence in the BPO market before stable vendors emerge.

• ICICI acquired fast-growing CustomerAsset.com in May 2002.
• Spectramind, the largest domestic operator, was acquired by Wipro, the IT service and software group, in 2002.
• TransWorks, a call center player, was acquired by the Aditya Birla Group, one of India's largest business houses.
• In February 2002, British Airways spun off its subsidiary WNS to Warburg Pincus.
• Perot Systems Corporation purchased HCL Technologies' shares in HCL Perot Systems (HPS), a joint venture formed by the two companies in 1996. Perot Systems and HCL formed the joint venture with a combined capital investment of U.S. $4.5 million. Perot Systems purchased HCL's stake in HPS for U.S. $105 million in cash. HPS's assets included approximately $45 million of cash and short-term investments as of November 30, 2003.