EDS To Acquire Majority Stake in Indian Outsourcer

EDS says it's offering $380 million to acquire a 52% stake in Indian business process and software development outsourcer Mphasis BFL Ltd. The offer represents a 30% premium over Mphasis' average share price over the past six months. Mphasis is listed on the Bombay Stock Exchange.

Mphasis currently has about 12,000 employees, 11,000 of which are based in India. EDS's acquisition of a majority stake in the company would be "complementary to our overall strategy to enhance EDS's presence and capabilities in India," EDS chairman and CEO Mike Jordan said in a statement Monday.

Mphasis provides a range of IT and business services, including application maintenance and development, transaction processing, and customer relationship management. It focuses primarily on the financial services sector.

With Western companies hiring Indian IT workers and service reps by the tens of thousands, and with top-tier indigenous firms growing at a similar rate, it's likely more U.S. vendors will simply purchase growth in India instead of trying to expand organically. Such activity has been minimal to date--in 2004, IBM acquired customer service specialist Daksh eServices for $170 million--but EDS's move could spark renewed interest in offshore acquisitions.