News : Serco on the Road to Recovery with Sale of Indian Call Centre Business
London, UK, Sept 16, 2015 -- Serco has offloaded one of the millstones around its neck, selling its troubled foreign business processing outsourcing (BPO) unit to Blackstone.
Plans to sell BPO were signalled in chief executive Rupert Soames’s "bring out your dead" profit warning in November last year, when he announced write-downs and provisions, a huge rights issue and hopes to reshape the company.
Revealing his plans for the FTSE 250 business, Mr Soames said he wanted Serco to return to its previous successes by focusing on government contracts. He suggested at the time that the company had made "two tragic mis-steps" by diversifying into new areas and concentrating on winning new work, rather than maintaining existing contracts.
About half of the hit that Serco said it expected to take related to the BPO division. The news came at a tumultuous time for the business, which was still recovering from its involvement in the scandal over charging the UK Government for electronically "tagging" prisoners who were dead, back in prison or had left the country.
Revealing the BPO deal with Blackstone, Mr Soames said the disposal "secured an import part of our plan" to concentrate on public contracts.
"This disposal will strengthen further our balance sheet but also enable us to focus on the group’s five core markets [giving us] greater financial and operational flexibility to move forward, doing what we do best."
The deal in expected to complete by the end of the year and will see 51,000 staff moving across.
Serco built up its foreign BPO work with the purchase of India’s Intelent in 2011 in a deal the company hoped would boost its overseas revenue.
However, the price Blackstone has paid for the business is a significant discount to what Serco paid for Intelenet, and reflects lower interest in sector. Serco is understood to have spent a lot of time shopping around for a buyer for the BPO unit.
Serco said it is also in the process of selling its remaining loss-making BPO operations.
Posted by Veronica Silva Cusi, news correspondent
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Serco’s Business Process Outsourcing (BPO) capabilities offer middle and back office solutions to public and private sector organizations globally. With a presence in ten countries, 98 locations and a strong workforce of more than 50,000 employees it is among the top 20 global BPO players with onshore, offshore and near shore capabilities in the US, UK, Europe, Middle East, India, Mauritius, Philippines, Guatemala and Australia. With flexibility in designing solutions to suit client requirements, Serco’s BPO capabilities have helped clients to re-engineer processes across industry verticals such as Banking & Financial Services, Travel, Transportation & Hospitality, Healthcare, Logistics, Utility, Retail & Manufacturing, Telecom, IT & Online services, Media, Education and Entertainment. We provide transactional, process and voice support, finance and accounting services, and business transformation consulting, making us strongly placed to provide our customers with a broad range of end-to-end business services.
Blackstone is an asset management and advisory firm.
Published: Monday, September 21, 2015