It is strongly rumoured that Indian conglomerate Essar are to sell their call centre and BPO unit Aegis. This is not the first time such a move has been proposed but does raise questions about who would buy Aegis and why. If the stories are to be believed, Essar plan to retain the Indian domestic unit. The total business turns over around $800 Million so it's unclear who would buy it and for what purpose. It may well be that some of the Indian BPOs might consider a deal but given the likely cost to acquire the company, it's unclear whether any of them would be willing to invest the funds.
There are strong rumours that Teleperformance are in the running to buy the company. Given their position as the largest provider of call centre services, it is unclear what Aegis would add to their portfolio. Outside of India, Aegis operate call centres in The Philippines, United States, United Kingdom, Australia and Latin America but Teleperformance already has a substantial presence in each of these locations. Of course, Teleperformance would like the sizeable client list that Aegis has and Teleperformance has been no stranger to acquisitions in the past although they have grown well organically in recent years. Aegis itself is a mixture of organisations as they have grown predominantly through acquisitions with the largest being People Support's 10,000+ agent operation in The Philippines. Critics of Aegis have often said that the volume of acquisitions they have done has meant that it is a mixture of companies rather than 1 truly global operation. In reality, Aegis have made considerable efforts to consolidate their business but their lack of organic growth might worry potential purchasers. However, this is unlikely to put off Teleperformance who will undoubtedly use their experience in mergers to consolidate all parts of the organisation into 1 unit. Also, the fact that each geography works as a separate entity might make it easier for Aegis to carve off their Indian domestic operation. Teleperformance have seen their position as the largest global call centre provider threatened by the Convergys purchase of Stream Global Services. Being so soon after this acquisition, it is unlikely that Convergys would want to engage in a bidding war for Aegis. It's also unlikely that the other large American-owned outsourcers would be that interested in Aegis. Few of them have large financial reserves and should such a deal be done through debt, then this could be a risky move if fiscal policy tightens in coming years.
Aegis isn't a bad business. This isn't a fire sale! This is simply Essar deciding that Aegis is not core to their business as a whole. Therefore, the decision as to whether a purchase by Teleperformance (or anyone else for that matter) is a good deal comes down to how much they pay for the business. Aegis have paid big bucks to build up their empire and the owners of Essar are not short of a rupee or 2, so it's unlikely that they will choose to sell it cheap. However, history has shown us that deals do not stimulate growth and in some circumstances can actually slow it down. If Teleperformance buy Aegis, the competitors will be busy telling potential clients that they shouldn't choose TP as they are too focussed on merging with Aegis. I would imagine that this is what TP sales people have been saying to potential clients of Convergys over recent months.
It will be interesting to see how this pans out. The fact that both parties have stated that they are discussing a deal suggests that the talks are probably at a far more advanced stage than they are currently saying.