Intelenet: Will the Identity Change?

The acquisition of Intelenet by Serco Group, one of the worlds largest public services outsourcing companies, has not come as a surprise to anyone who follows this segment. Intelenet was up for grabs and Serco wants to enhance its footprint in both BPO and India. It started with a comparatively smaller acquisition a couple of years back by acquiring InfoVision Group and the success of that gave it the confidence to acquire a larger company in India. However the valuation is being seen as on the higher side by analysts and observers.

We have changed our ownership multiple times, says Susir Kumar, CEO, Intelenet, in a press briefing after the announcement was made. Hopefully, this will be the last, says Kumar. Intelenet has changed its ownership 5 times since it was incorporated in 2000 and began operations a year later. It started as a 50-50 jont venture of TCS and HDFC. In 2004, HDFC bought out TCS stake. Soon after, HDFC sold that stake of 50% to Barclays of UK. After 3 years, Barclays got out selling stake to private equity firm Blackstone Group. In October last year, Barclays, which is a client of Intelent, repurchased about 13% stake in Intelenet. With this acquisition by Serco, HDFC, Barclays and Blackstone will exit.

What is interesting is that despite changing its ownership so many times, Intelenet is the only BPO company from among the first generation of such companies (those that started in 1999-2000 period) which has not changed its name. While others like Spectramind, Daksh, CustomerAsset, and Tracmail which started around that time have been acquired and have lost their original names, a few others like vCustomer and 24/7 Customer have not changed their ownership and names.

Interestingly, Intelenets CEO, Susir Kumar is also the only employee CEOas opposed to promoter CEOs, who has continued as the CEO of the company from the beginning. Though not widely known, this is a unique record that Kumar holds, an amazing feat considering the frequent management changes that this industry is infamous for.

The question is, will the final acquisition by Serco result in the change of the identity and leadership for the company? Initial indications are that while Kumar may continue as CEO, the Intelenets name may be dropped. Serco changed the name of InfoVision after it acquired the company to Serco BPO and Intelenet and the existing Serco BPO (erstwhile Infovision) will be integrated, according to the official statement.

By making 2 large acquisitions with broadly the same positioninglarger domestic play and smaller offshore component, Serco has made its intention clear that it wants to tap the domestic market.

When we look at a market, we look 2-3 years ahead. I think India will be a big market in 2-5 years time.Immediately, we will grow in the BPO sector itself from being #3 to #1, said Chris Rajendran Hyman, CEO, Serco, in an interview to Dataquest, a few months after the InfoVision acquisition.

With this acquisition, he has done it.