Outsourcing giant Serco has acquired Indian IT services provider Intelenet for £385m to bolster its BPO offering.
The deal, which increases Serco's Indian workforce grow from 4,000 to 40,000, will give the company offshore options for its large UK public sector customer base.
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Serco supplies a wide variety of business process services with an increasing leaning towards IT.
Chris Hyman, CEO of Serco, said the firm is targeting BPO for growth and existing and potential customers will be targeted. "The international BPO market is growing quickly as companies seek out new ways to improve their service and reduce costs. Intelenet's high value capabilities and customer base, together with its economies of scale, means we can access new markets and strengthen our existing propositions."
Serco's wide presence in the UK public sector could benefit from offshore services options as they strive to cut costs. "Presumably Serco knows what is around the corner in terms of the government offshoring work," said Peter Brudenall, outsourcing lawyer at Lawrence Graham.
"It is inevitable councils will look increasingly at outsourcing, and particularly offshoring, given the cuts forced on local government."
But he added that the movement of service delivery offshore will be littered with challenges. "This might lead to a transformation of the UK public service, but the difficulty will be getting the electorate 'on-side' and seeing the benefits. It has already proven difficult for banks to convince customers of the benefits of call centres based in Bangalore."
Robert Morgan, director at sourcing broker Burnt-Oak Partners, believes Serco has acquired Intelenet to boost its BPO in the public sector. "There is no doubt that it has acquired with the public sector in mind."
He added that the government is beginning to take offshoring seriously and a recent data protection law introduced in India will convert more to offshoring. "The fear was always about where the data was stored and the absence of data protection laws in offshore locations. Now India has one," said Robert Morgan.
Birmingham City Council's decision to offshore up to 100 IT jobs could be the deal that opens the floodgates.