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Last Updated : Jun 14, 2012 05:38 PM IST | Source: CNBC-TV18

Serco acquires public sector arm of Vertex BPO

Serco BPO has acquired the UK public sector operations arm of Vertex BPO for almost Rs 500 crore. CNBC-TV18's Kritika Saxena talks to Susir Kumar, Executive Chairman of Serco Global Business Solutions to discuss the contours of that deal.


Serco BPO has acquired the UK public sector operations arm of Vertex BPO for almost Rs 500 crore. CNBC-TV18's Kritika Saxena talks to Susir Kumar, Executive Chairman of Serco Global Business Solutions to discuss the contours of that deal.


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


Q: The cash consideration is around 55.5 million pounds, that's approximately Rs 481.7 crore in today's exchange rate. Give us a sense, is there an equity consideration as well and how will the payment be made?


A: This is basically an acquisition of the public sector business of Vertex BPO in the UK and the business is a USD 110 million one that currently provides to the UK local authorities. We have paid 55 million pounds. It's an all cash deal where we would be paying the cash consideration and in return would be taking over the entire public sector business which builds about 110 million sterling per year.


Q: Give me a sense about Vertex as a whole. How many client's is it servicing and will you take on board all the 3,000 employees that are currently working with the UK public services BPO arm of Vertex?


A: Yes, one of the big focus areas we have within Serco BPO is on the public sector and the government sector, both in the central government and the state governments. As a part of this deal, we are going to take over the entire public sector business of Vertex with 3,000 employees.


It currently provides services to a lot of council and local authorities for child maintenance, old age help and others. So any community service providers to the councils and counties in UK are the typical customers that we have got.


We actually help to deal and give information to the citizens. We help them with any kind of complaints that they have. We ensure that the subsidies or whatever is required reaches them in the right manner.


Q: Europe and UK has been going through a bit of a slowdown, IT players specifically have seen the damages. Have you seen any kind of a slowdown and why probably look at an acquisition or expanding your footprint in an area which is going through troubled times at this point in time? Just give us a sense about the deal pipeline at this minute?


A: One of the strengths that we have within Serco BPO is our ability to provide services and our understanding of the local government, especially in the UK. About 40% of the revenues of Serco BPO comes from the services that we provide for the public sector.


We already provide services to three big councils in the UK and what is happening is a lot of local authorities now want to outsource this to somebody who specializes in providing these services to citizens. They are looking at making sure that there is effectiveness in the services to the citizen.


By this acquisition what we are doing is enhancing our skills to provide services to multiple other counties in the UK. Right now we provide service to roughly about 5 big counties and we are hoping that with this acquisition we will be able to provide to many more.


Q: What is the capacity addition that Vertex brings on board and will you service your current clients from Vertex portfolio as well?


A: With this acquisition, we have not only got a few clients like the public sector clients on board, we have also got 3,000 employees. We have got the entire infrastructure. We will leverage just to get into different markets. I think the key point is when we started building the Serco BPO, we have created a business with a USD 1 billion revenues this year.

Just after that we have concluded four deals including this and the total cumulative annual contract value is roughly about USD 180 odd million per year. These contracts run from 4-10 years. Despite the slowdown in UK, if you have the capability, you can still penetrate the market.



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First Published on Jun 13, 2012 05:25 pm
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