Essar Group May Think Over Bpo Unit
Thursday, October 15th, 2009
The Essar group is considering merger of Essar Information Technology Holdings (EITH), which provides common services operations across the
group, with its BPO firm Aegis. The diversified Essar group formed EITH three years ago to consolidate common functions such as finance and accounting (F&A), human resources (HR), and payroll to its business arms in steel, oil, shipping, power, telecom and retail.
The merger will help Aegis diversify into areas such F&A, HR and payroll, as well as bring industry-specific knowledge within the company. It will also help Aegis get a higher valuation when it goes public. The Ruias of the Essar group have, at various forums, hinted that they eventually hope to take their BPO business public. Aegis CEO and MD Aparup Sengupta confirmed the merger move.
Mr Sengupta said: “We already run a shared service operation, but that is currently limited to Aegis. Whenever we acquire a firm, we move its back office functions to our common platform. This has helped us keep our sales and general administrative expenses low and maintain our margins.” So far, Aegis has acquired 14 firms and its stated goal has been to do at least one acquisition every quarter.
Around 1,000 people could move to Aegis as a result of the merger. The profile and compensation structure of the EITH employees could be different from the Aegis staff because some of the work done at EITH requires chartered accounts and management graduates.
The Essar group had hired Vijay Mehra as global CIO to chart out a common IT strategy for the group.
ET had first reported that the group was building a shared services operation similar to what many global firms have done earlier. Mr Mehra recently quit the Essar group and moved to Patni Computer as executive vice-president and head (business verticals). The group is currently in the process of searching for a new CIO to replace Mr Mehra. Source
