Tech Mahindra Buys Hutchison Whampoa’s Call Centre Business

After the markets closed on Monday, 03 September 2012, there was speculation regarding the possibility of Tech Mahindra buying Hutchison Whampoa’s call centre business. What gave this speculation some form of basis was the fact that Tech Mahindra was holding a press conference today to make a strategic announcement. On the back of this news, and earlier speculation, the stock price of Tech Mahindra closed higher by 1.28 per cent.

As part of the deal, the clients of Hutchison Global Services have committed to procure services worth USD 845 million over a period of 5 years, and have agreed to Hutchison Global Services Private Limited (HGS) being their exclusive provider of certain agreed services in India. Tech Mahindra bought a 100 per cent stake in HGS for an upfront USD 87.1 million (Rs.484.03 crore).

HSG provides customer lifecycle operations to clients in UK, Ireland and Australia and has an associate base of over 11,500 employees. HGS operates out of Mumbai and Pune and is among the largest captives in the Telecom Domain.

Tech Mahindra derives revenue primarily from technology services provided to clients in the telecommunication industry. For FY12, 80.7 per cent of revenues came from Telecom Service Providers, 6.6 per cent from Telecom Equipment Manufacturers, 9.7 per cent Business Support Group and 3.1 per cent from others. Considering the industry specific operational model of Tech Mahindra, this acquisition would definitely help the company leverage its position.

This deal would enhance Tech Mahindra’s standing in the customer management space. Also, it would enable Tech Mahindra to leverage the acquired capabilities and scale for expanding the scope of their existing services to other parts of the Hutchison group, and also to other customers and verticals.