EDS buys Mphasis stake

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Electronic Data Systems, the computer outsourcing group, on Thursday announced that it had acquired a majority stake in Mphasis, an Indian outsourcing company.

The move extended a push into the country by EDS, which, along with other IT groups, has been challenged in recent years by the rise of low-cost competition for outsourcing contracts from rivals in India, which boasts a large, tech-savvy population of fluent English speakers.

It followed news this week that IBM, the world’s biggest IT company by revenues, would pump up to $6bn into India over the next three years.

Ron Rittenmeyer, EDS’s chief operating officer, said the acquisition would allow EDS to boost its Indian workforce to 20,000 by the end of the year, compared with about 4,000 today.

Mphasis, which made a profit of Rs1.5bn ($33m) last year on revenues of Rs9.4bn, specialises in outsourcing of call centres and IT processes for big banks, telecoms and healthcare companies.

EDS said on Thursday that its offer of Rs204.5 a share had garnered more than the 83m shares necessary to take a controlling stake in Mphasis since it announced its intentions to take over the company in April.

It said the total consideration for the majority stake was worth about $380m in cash.

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