Continuing a wave of consolidation in India's software and services outsourcing industry, Tata Consultancy Services (TCS) announced Monday that it is acquiring Phoenix Global Solutions India Pvt. Ltd. (PGS), the Bangalore-based software development and business process outsourcing (BPO) subsidiary of The Phoenix Companies.
TCS, India's largest software company, will get the business that PGS current business and its other clients, according to Atul Takle, vice president of corporate communications at TCS. Mumbai-based TCS already has some clients in the insurance sector, including American International Group (AIG) in New York. "PGS also has some solutions for the insurance industry which we will now introduce to our clients, as well as to new clients," Takle said.
Financial details of the acquisition were not disclosed.
Set up in 1996, primarily to service the in-house software development requirements of Phoenix, PGS has emerged as a supplier of software and services to other insurance companies as well. Phoenix, based in Hartford, Connecticut, is a wealth management and insurance company.
With its 400 staff in Bangalore, the company provides insurance industry services, including IT, BPO and customer care. PGS also provides transaction processing support to insurance companies, such as new business processing, policy administration support and distribution administration. The company has experience in customizing and implementing technology products for the industry.
The deal enables Phoenix to focus on its core businesses, Chairman, President and Chief Executive Officer Dona Young, said in a statement. TCS is "exactly" the type of company The Phoenix Companies hoped would buy PGS, she said.
India's software and services industry is going through consolidation, including a number of high-profile acquisitions. IBM Corp. in Armonk, New York, announced in April that it plans to acquire Daksh eServices Pvt. Ltd., a BPO company in Gurgaon, near Delhi. Earlier this year, Citigroup in New York decided to increase its stake from 44 percent to 100 percent in e-Serve International, a Mumbai-based BPO company that has Citigroup entities worldwide as its only clients. Citigroup owns equity in e-Serve through its subsidiary, Citibank Overseas Investment.
Even as some multinational companies are buying up local companies, others like Phoenix are selling their operations in India to local companies. General Electric in Connecticut, for example, is said to be negotiating the sale of some of its low-end BPO operations in India to local companies. When it becomes too expensive to do the work in-house at wholly owned Indian subsidiaries, multinationals decide to hive off the operation to an Indian company that will continue to provide the services to the multinational at a lower cost, according to analysts. To the Indian company, buying the local operations of a foreign company gets it access to a large customer.