Hurray!: Team Daksh has lots to cheer about

The irony is hard to miss. Even as presidential candidates in the US rave and rant about outsourcing of work to India, America's gold standard of technology brands, IBM, is quietly sewing up a deal to acquire the Gurgaon-based it-enabled services provider, Daksh eServices. When BT went to press, Daksh had denied that any such move was afoot and its CEO, Sanjeev Aggarwal, said through a spokesperson that "(he would) not comment on speculation". Similarly, IBM declined to comment, saying that the "the story is purely speculative in nature". However, people in the know confirmed to BT that a deal had been struck and that an announcement to the effect was imminent. BT learns that IBM may pay anywhere between $150 million and $200 million (Rs 660 crore to Rs 880 crore) for the purchase. For Daksh's promoters Aggarwal, Pavan Vaish, and MJ Aravind, who own 23 per cent of the BPO's shares equally, it would mean a huge windfall-of about $12 million (Rs 53 crore) each.

Why does a BPO like Daksh-where CVC International, gap and Actis (formerly CDC) own half the company-make sense for IBM? The answer is straightforward. For almost a decade now, IBM, thanks to its current CEO Sam Palmisano, has been pushing services more than boxes. Today, it has complete services capability, including the ability to design, build, install, and maintain complex it infrastructure and services. The only missing piece is low-cost technical support solutions. Its competitors (in certain segments) like Dell, Infosys, and Wipro, already have BPO operations in the country.

IBM, then, had two options: Build or acquire. Building one may have taken time. In fact, last year, Big Blue did launch a small BPO based out of Bangalore that has grown to 450 people or so in less than a year. In contrast, acquiring Daksh, which is exceptionally run, shortens its time to critical mass. Says R. Mohan, President and CEO of Hinduja TMT, one of the largest listed BPO players in the country: "It is not just a question of getting more warm bodies to fill more chairs. One has to get the systems and processes right. The complexity of this challenge is directly proportional to the numbers. Daksh has already gone through a learning curve. With this acquisition, IBM will be shortening its learning curve by paying a premium, if the acquisition is confirmed and goes ahead."

Indeed. Daksh runs five facilities in India (four in Gurgaon and one in Mumbai) and one in Manila, with a seat count of more than 4,000 and head count of 6,000-odd. Last year, it raked in $30 million in revenues, and could end this financial year with $50 million. But what may have interested IBM more is Daksh's back-office expertise in the areas of insurance and telecom. For instance, its customers include Amazon.com, which also has a stake in the company, Sprint PCs, Yahoo!, and Hewlett-Packard.

How does the deal impact the IT and ITEs industry? "I can only say it will be fun," quips Raman Roy of Wipro Spectramind, who sold his BPO to Wipro in July 2003. On a more serious note, Kiran Karnik, President of Nasscom, says that while the industry dynamics may not change much, "some scaling up (will) happen." In other words, expect more such M&As.

-R. Sridharan and Venkatesha Babu, with Alokesh Bhattacharyya and Sudarshana Banerjee

Flying Colours
ISB goes to town with record placements.

House full: Recruiters queue up to hire ISB students

Ever since the Hyderabad-based Indian school of Business graduated its first batch of one-year MBA students in 2002, it has been mostly reluctant to share its placement data. Not any more. This year, the school has actually emailed detailed placement data to the media, even posted it on its website. Needless to say, the reason for the change of heart is its record placement season. One hundred and forty four companies participated in the placements, and made 273 offers to ISB's 192 (of 219) students who participated. The highest foreign salary was $151,000 (about Rs 66 lakh) and the highest domestic salary was Rs 20 lakh. The average domestic salary, at Rs 9.05 lakh, is significantly higher than what the Class of 2004 made on average (Rs 5.43 lakh) when it joined ISB. The largest number of offers (102) came from the IT industry, followed by ITEs (39), and financial services (28). Among the companies that made the highest offers were Wipro, Infosys, Cognizant, Novartis, and Johnson & Johnson. Finally, ISB, which only admits students with work experience, may be getting the recruiter's due attention.

AHAI
Flight Of Fancy

What kind of a traveller would end up launching a chartered airline? One who's also been a consultant. In 2000, when Samit Sawhney quit his job at Ernst & Young's London office, he decided to go backpacking for his travelogue offendingly titled All The World's A Spittoon. When he reached the Andaman & Nicobar Islands, he was dismayed by their remoteness. An idea was born. Sawhney, now MD of The Barefoot Group, tied up with PB Air of Bangkok to launch the first international chartered service to Port Blair. A curtain-raiser service was launched middle of last month, and full service-twice a week until April 2005-begins December this year. Next on pilot Sawhney's radar: Varanasi.

-Moinak Mitra

BOO-BOO
Problem Of Plenty

The ONGC share allotment goof up, where 52 high net worth individuals got full allotment instead of 60 per cent of the application amount, was the first of its kind in the country. Who do we owe the dubious distinction to? A low-profile registrar and transfer agent called MCS. And what caused the gaffe? According to MCS' Kolkata-based promoter, Santosh Rateria, "human error" due to exhaustion. It is easy to sympathise with Rateria at least on this count. There's been a deluge of IPOs (mainly those of psus) over the last two months. MCS itself has handled six IPOs in the last one month, and its staff, says Rateria, has been working 18 to 20 hours a day. Give them a break, Mr Shourie.

-Roshni Jayakar