EDS to shell out $380m on Indian outsourcer

Outsourcing giant EDS tables an offer to purchase majority stake in MphasiS

EDS has become the latest outsourcing giant to attempt to ramp up its presence in India announcing yesterday that it has tabled an offer to acquire a majority stake in applications and business process outsourcer (BPO) MphasiS BFL Ltd.

Under the terms of the deal EDS will pay $380m for a 52 percent stake in the 12,000-strong firm, with the company expecting the deal to close during the third quarter.

The move follows IBM's 2004 acquisition of India-based BPO specialist Daksh and forms part of the wider trend of US and European-based IT service providers setting up development and call centres in India as they seek to imitate the low-cost offshore model of India-based rivals.

In contrast, Indian firms such as TCS, Wipro, Satyam and Infosys are widely tipped to make acquisitions in the west as they seek to provide more services closer to their customers – a tactic that, combined with the global providers moves into India, should ultimately see existing cost differences disappear.

The latest deal will also raise speculation that the global outsourcing market is on the brink of a wave of consolidation after CSC also confirmed earlier this week that it is considering a potential sale.