Serco buys UK-based Anglia Support Partnership

As a part of the deal, Serco has also won a 121- million pound contract with NHS. Sushir Kumar, executive chairman, Serco spoke exclusively to CNBC-TV18’s Kritika Saxena about the details regarding the deal.

Below is an edited transcript of the interview on CNBC-TV18.
Also watch the accompanying video.

Q: How many employees does ASP have and what are the capabilities that it brings on board post the acquisition?

A: ASP is an organisation that provides services to about 48 hospitals and community centres in UK. It has about close to 700 persons on its staff who we will be taking on board.

From now on, we will not only be providing services for these 48 hospitals and community centres, but the framework actually allows us to cater to more hospitals and community centre under the NHS. The contract is currently for about four years.

Q: Will you be looking at extending this contract or is it something that you will discuss in time?

A:. The value of the contract is about USD 180 million. There is a provision to extend the contract by another four years, but right now the first run of the contract is going to be for four years.

It also has an element of getting more hospitals and community centres and also provides us a lot of capabilities in terms of billing services, back offices for hospitals and healthcare companies in the UK.

Q: This is around 121 million pounds; a significant amount considering the UK has been slightly tight in the public spending sector. How does the public sector in the UK look for BPOs?

A: The UK government is actually concerned about providing better service to the citizens. One of the ways it is trying to achieve that goal, is to include private participation in any manner.

So as SERCO already provides a lot of support and services to the public sector in the UK and we think we are in a better position to provide those services more efficiently and cost-effectively.

Given the focus on public service by the UK government, we should be seeing more participation with the UK government in providing services.

Q: By when will the revenue from NHS deal kick in to the balance sheet and what is quarterly or the incremental revenue?

A: We have just taken over the operations. So roughly this annual contract will be billed for about eight months of operations. But on an annual basis, it is roughly about 30 million pound sterling.

By this year-end, we are targeting beyond USD 1 billion of turnover in Serco Global Services which is a division of Serco that provides middle- and back-office services. So in terms of getting to that USD 1 billion target, this would be a critical part of our revenue.

Q: How strong would the margin benefit from this particular deal be?

A: There are multiple dimensions to this deal. Firstly, this is the first big deal that Serco has closed after acquiring a few companies in the Midlands like Intelenet and The Listening Company. So, this is the proof of combining Serco’s frontline services and relationships in the UK public sector.

Secondly, in terms of revenue, if we are able to get more hospitals and more community centres, this deal will significantly add to our revenues.

Thirdly, the deal has increased our capability. Very few companies have capability to service the public sector and within the public sector, the healthcare segment.

Lastly, it is definitely profitable and increments our coffer as well.