BPOs up for sale find no takers

Four large business process outsourcing (BPO) companies worth USD 870 million are up for grabs. While valuations are down by 45% since last year, buyers are still cautious and are unwilling to spend. CNBC-TV18's Kritika Saxena reports.

The BPO market has four large deals on the block. Half of WNS is on sale and the captive BPO arms of large companies like UBS, American Express and HP are also being sold.

50% of WNS, currently owned by Warburg Pincus, is expected to be valued at USD 400 million. A 200-seater BPO unit of UBS is expected to be valued at USD 70 million. Two large captive BPO units of HP are up for grabs valued together at USD 100 million. The BPO arm of American Express is valued at USD 300 million.

Says Nasscom Chairman Som Mittal, "The bpo industry consists of Indian companies, multinationals and captives. Captives set up units because they think it is core competencies. But as things start maturing they suddenly realize that the work they do is commoditised now and why should they mange when they can monetize it. So many of them sell, like Citibank did."

Nasscom says that BPO valuations are down by 45% since last year and are expected to see a further dip. But companies are still cautious and unhappy about the prices for these units. Largecap firms like TCS, Wipro, HCL Tech and even IBM have spoken about being open to acquiring captive arms but no transaction has yet been completed in the last one quarter.