EDS Buys Majority Stake in Outsourcer MphasiS

Electronic Data Systems (EDS) announced Thursday that it has succeeded in its efforts to scoop up 83 million shares of Indian outsourcer MphasiS, giving it a majority stake in the company.

Although MphasiS BFL will remain as a separate company, the majority stake gives EDS access to 11,000 staff in addition to the 3,000 staff it already has in India. EDS is also expanding in India, and the two companies will have between them more than 20,000 employees there by the end of this year, said Stephen R. Heidt, EDS’ vice president of business workforce and capacity management, Thursday in Bangalore, India.

EDS’s move comes as multinational services providers such as IBM, Capgemini and Accenture are hiring staff in large numbers in India to build a low-cost offshore services delivery capability. IBM announced last month that it has 43,000 employees in India offering a range of services from application development to business process outsourcing.

EDS announced in April that it would offer to acquire a majority stake in publicly listed MphasiS for 204.5 Indian rupees (about US$4.50) per share, pursuant to Indian securities regulations. More than the 83 million shares required by MphasiS were tendered in response to the offer, which closed Monday, EDS said. The total for the transaction is about $380 million cash, the company said.

The majority stake in MphasiS brings to EDS complementary skills, particularly in the area of short-term projects for application development, Heidt said. MphasiS’s BPO and call center business will help EDS quickly scale its services from India in these areas, he added.

The acquisition will enable EDS to be a larger player in small application development projects of contract sizes of up to $25 million, which is an area MphasiS specializes in, said Mohan Krishnan, president of the financial services and solutions business of MphasiS.

-John Ribeiro, IDG News Service

For related news coverage, read Indian Outsourcer ICICI OneSource Expanding into China, Vietnam.

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