The Indian BPO industry continues to chart strong growth at 37% for FY 2005-06. Indian BPO revenues are expected to grow to $8-8.5 billion in FY 2006-07 from $6.3 billion in FY 2005-06.

Lets take a quick look at some of the significant events over the year 2006.

Landmark M&A deals

Ayala Corp: On an acquisition spree!
Philippines-based Ayala Corp acquired Integreon, a leading KPO focused on the legal, publishing and financial services verticals. The company's BPO arm, LiveIt Solutions acquired the shares of Integreon from an investor group led by Connect Capital and the View Group. Integreon will utilize the $20 million from Livelt towards expansion and acquisitions.
Another company on Ayala's acquisition radar was Pune-based graphics BPO, Affinity Express. The outsourcing provider with domain expertise in embroidery design outsourcing was bought out for over $25 million.

R.R.Donnelley: Aggressive expansion plans!
Publishing services provider R.R.Donnelley acquired Banta, a provider of printing, supply chain management and related services in a $1.3 billion cash deal. Banta, which operates out of the US, Europe and Asia earned $1.5 billion in revenues last year. The acquisition will enhance R.R. Donnelley's magazine, catalog, book and direct marketing segment offerings.
The publishing major bought out OfficeTiger, a New York headquartered multiservice BPO for $250 million. OfficeTiger was merged with UK-based Astron, which was acquired by the company in 2005.

EDS: Acquired larger stake in MphasiS
EDS acquired a majority stake (more than 83 million shares) in the Bangalore-based MphasiS for INR 204.5 per share (approx $4.5). MphasiS employs about 12,000 people. This acquisition will give EDS an added presence and headcount in India, and will strengthen EDS' competitive position vis-à-vis competitors like IBM, Accenture and Cap Gemini, which already have a significant India presence.

Apollo Health Street: Strengthens its domain expertise
Apollo Health Street (AHS) cemented its position in the healthcare segment with the acquisition of US-based Armanti Financial Services for $31 million.

Most deals were driven to acquire domain knowledge, new customers and access to new markets. We found that KPO acquisitions formed the growth strategy of several large companies.

Contracts that made waves

Astron-ING
Deal value: $465 million
Astron BPO won a seven-year document outsourcing contract from ING bank. The deal includes a range of services like print, mail, scanning and fulfillment for the bank's 60 million customers.

Zavata-US Hospitals
Deal value: $80 million
Zavata, a healthcare BPO will offer revenue cycle management to hospitals in West Virginia, Illinois, California and Missouri.

Genpact-US-based healthcare information service provider
Deal value: $70-80 million
Genpact bagged a five-year contract from a US-based healthcare information service provider for analytics work related to medical claims, spend analysis, clinical data and healthcare claims.

Integreon-Clifford Chance
Deal value: £30-40 million
Mumbai-based Integreon bagged the deal from one of the largest UK-based law firm, Clifford Chance.

TCS-Eli Lilly
Deal value: est to be in the range of $30 to 35 million
TCS bagged a multiyear deal to provide software services, clinical trial data management, statistical analysis and medical writing to US-based pharma company Eli Lilly.

Contracts bagged by Zavata and Integreon display the growing client confidence from the conservative segments such as healthcare and legal services. Further, the contract with Integreon comes at point when legal outsourcing is still in its early days.

Companies listed!

• Mumbai-based WNS Holdings became the first pure-play Indian BPO company to list on the New York Stock Exchange.
• EXL Service closed its IPO on NASDAQ. The company raised about $68 million from the IPO, offering 5.75 million shares, including 750,000 shares with underwriters.
• Pune-based HOV Services that offers account receivable management got listed on the Bombay Stock Exchange.

Related Items:

1. Mergers and Acquisitions this Quarter (Jan-Mar 2008)
2. Interview: Somshankar Das, e4e Business Solutions
3. ValueNotes Products
4. Building on Multi-lingual Capabilities
5. UK Outsourcing to Intensify!