IBM Snares Daksh with Big Bucks

In its first acquisition in India, US IT giant IBM has signed a definitive
agreement to buy out Gurgaon-based BPO firm Daksh e-Services for an estimated
$160 million. The deal, which was signed early morning on Wednesday, April 7,
2004, comes almost a week after repeated media speculation and constant denial
by top brass at Daksh.

According to sources close to the deal, while Daksh would become part of the
IBM Corp after acquisition, its founder promoter and CEO, Sanjeev Agarwal would
continue to hold his position. Giving brief details about the deal, an IBM press
release said that as a result of this agreement, IBM Business Consulting
Services will acquire Daksh’s key Asian business transformation practices and
experienced local skills, already serving an existing client base.

Sanjeev Agarwal, CEO, Daksh

The transaction, which is subject to Indian regulatory approvals, is expected
to close in May, 2004. Presently three private equity investors–General
Atlantic Partners, Actis (previously called CDC) and Citigroup–hold two-third
of the equity in Daksh. The rest is with Agarwal, promoters and other members of
the senior management. Talking about the deal, the IBM press release further
said that the acquisition will enhance IBM’s business transformation
capabilities in key areas including CRM and financial management services in key
industries such as banking, insurance, retail, technology, telecommunications,
travel and transportation.

Besides, the initiative is also expected to increase the scope of IBM’s
global network of 22 business transformation delivery centers, adding
capabilities in India and the Philippines. This network, which includes centers
in the US and 12 other countries, already serves hundreds of clients globally.
The deal also brings along Daksh’s experienced, strong management team to IBM
in India. Set up set up four years ago, Daksh is one of the fastest growing
call-center operators in India with 6,000 employees.

Shubhendu Parth and Rishi Seth in New
Delhi