IBM Plans to Buy Call Center Firm in India

Making one of the largest foreign investments in India in many years, International Business Machines Corp. announced its plans to buy call-center company Daksh eServices Ltd.

Industry executives estimated the purchase price at between $150 million and $200 million, although neither IBM or Daksh would reveal the actual price. The acquisition is expected to be completed in May, the Wall Street Journal reported.

Daksh, with $60 million in revenue, is one of India’s biggest call-center companies. Founded in 2000, it now has more than 6,000 employees and answers customer service calls for multinational clients, such as

IBM has aggressive plans to expand its Indian work force of 9,000 employees, who develop software and do back-office work. In Calcutta, it plans to double the number of employees to 4,000 by the end of the year.

IBM’s announcement comes amid a firestorm of criticism that U.S. companies are sending jobs to low-cost foreign countries. Legislation is being considered to curtail outsourcing to India, and in this presidential election year, the issue sparks strong emotions.

This year, IBM said it plans to send 3,000 American jobs to other countries while adding 5,000 new employees in the U.S.

Over the past four years, three investment firms have invested $29 million in Daksh: CDC Capital Partners of Britain, a private-equity arm of Citigroup Inc. and General Atlantic Partners of the U.S.

India’s $3.5 billion call-center business may become more consolidated as a result of the IBM purchase. Some companies are looking to be acquired; others are considering public offerings, the Journal reported.

The Daksh acquisition "is a very positive step, given all of the rhetoric" against outsourcing in the U.S., says Vikram Talwar, chief executive of Exl Service, a company that performs back-office and customer-service work for clients in the U.S. and Europe. "It bodes well when you have big players coming in and putting down a fair amount of money."

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