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IBM Said To Get Bigger India footprint

IBM is buying Indian call center operator Daksh e-services, a deal that could help improve Big Blue's market position as a provider of outsourced IT services to major business customers.

According to reports in the Financial Times, Reuters and AP, the deal is expected to be in the $150 million to $200 million dollar range and is expected to be completed by May. The Wall Street Journal quoted an IBM official saying the deal would extend the company's position in the region, where it is leveraging a local presence in the business outsourcing arena.

IBM and Daksh had not responded to requests for comment by posting time.

Daksh eServices is one of India's largest independent Business Process Outsourcing (BPO) companies. The company was founded in January 2000, and employs over 6,000 staff at locations across India and also has offices in the UK and the US. An office in the Philippines opened in January. At that time Daksh said it expected to have a 10,000-member workforce by 2005. Amazon.com is said to be one of Daksh's clients.

The deal would help IBM add more call center heft to its already strong signings in IT outsourcing contracts within its global services division. During the first quarter of 2004, revenues IBM's global services division (which rakes in about half of IBM's quarterly revenues) were up by 8 percent at $11.4 billion. Total contract signings were $17.3 billion during the quarter, in which the services division signed 18 deals with value greater than $100 million, and three of which were greater than $1 billion.

IBM and Daksh are certainly no strangers to each other. Although IBM issued no statement about the acquisition, it issued a press release last month touting its success implementing a Peoplesoft ERP implementation for Daksh in a record 20 weeks across all of its locations.

The news comes on the heels of Big Blue's announcement two weeks ago of a $750 million dollar, 10-year outsourcing deal with Bharti Tele-Ventures, in IBM would manage Bharti's IT infrastructure.

The latest deal for IBM arrives as offshoring grows as a hot-button political issue, as more companies take advantage of the cost savings involved with using lower-cost labor by offshoring their outsourcing needs.

A recent Gartner Group study predicted that a full 25 percent of US IT jobs will be offshored by 2010. Meanwhile, American firms are now also pitching "insourcing" and "onshoring" in an effort to stem the offshoring tide.



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