Serco has sold its foreign BPO business back to private equity group Blackstone for $387 million, as the British firm appears to have realized that providing outsourcing service to private enterprises is not as profitable as providing the service to governments.
Serco had bought this business from Blackstone in 2011, paying nearly $620 million. At the time, the unit had operations in seven countries, and its markets were forecast to grow by about 15 percent a year.
But the price Blackstone has now paid for the business is a significant discount to what Serco paid four years ago. Reports say Serco is selling the unit to avoid further loss. Rupert Soames, company’s chief executive officer, has stated that he would like to focus on government service contracts rather than private sector business.
“This disposal will not only strengthen further our balance sheet but also enable us to focus on the group’s five core markets,” said Soames. “Overall this gives us greater financial and operational flexibility to move forward, doing what we do best.”
Predominantly based in India, Serco’s foreign BPO business provides back-office services such as customer-loyalty programs, accounting, marketing, and data management to companies in fields including finance, telecom, travel and healthcare.
The operations employ 51,000 people in 67 BPO service delivery centers, of which 48,000 employees and 53 centers are in India.
According to terms of the deal, Susir Kumar and the current management team will continue to lead the business. As a result of the transaction, the business also will be rebranded as Intelenet Global Services. In fact, before being handed over the Serco in 2011, this unit was called Intelenet and it claimed to claimed to have expanded operations to Guatemala.
Serco put up this unit up for sale some time in November last year. There is little doubt that the company struggled to find out a buyer willing to pay the price it demanded. Serco says it might even sell off its loss, making U.K. BPO business as part of its restructuring program.