In its first ever acquisition in India, global information technology major IBM has agreed to acquire India's third largest business process outsourcing firm Daksh eServices to add skills in strategic areas.

The transaction, subject to Indian regulatory approvals, is expected to close in May 2004, an IBM statement said in New Delhi.

Though IBM did not reveal the deal size, industry sources said it could be somewhere between Rs 700-Rs 750 crore (Rs 7-Rs 7.50 billion).

In 2002, Wipro had acquired Spectramind for Rs 470 crore (Rs 4.70 billion).

Privately-held Daksh has more than 6,000 people. It offers call centre services and has more than 10 clients, including Amazon.com and Citimortgage, a mortgage banking subsidiary of Citigroup.

Daksh has three private equity partners -- General Atlantic Partners, CDC (now called Actis) and Citigroup -- holding two third of the equity capital. The balance is with company CEO Sanjeev Agarwal and founder promoters and members of the senior management.

Daksh had also made its mark in mergers and acquisitions by buying Etelcare International in a deal last year in the range of $30-40 million.

The company's profit figures were not known but it was believed to be planning an initial public offering.

As a result of this agreement, IBM Business Consulting  Services will acquire key Asian business transformation practices and local skill sets, IBM said.

"Daksh eServices has made its mark rapidly in the global business services market by providing clients not just with cost efficiencies but also with significant improvement in the way they run their business," Daksh eServices CEO Sanjeev Aggarwal was quoted as saying.

The acquisition of Daksh will enhance IBM's business transformation capabilities in areas like customer relationship management, financial management services in industries like banking, insurance, retail, technology, telecommunications, and travel and transportation.

That will also increase the scope of IBM's global network of 22 business transformation delivery centres, adding capabilities in India and the Philippines, IBM said.

"India is one of the fastest growing economies in the world and an important marketplace for IBM. This investment is indicative of our commitment to supporting our clients in this region and leveraging local capabilities to extend our leadership position in the business transformation services marketplace," Abraham Thomas, GM, IBM India, said.

IBM's acquisition of Daksh first this year

IBM's acquisition of Daksh eServices is the first acquisition this year and presumably the largest so far in the country in the ITeS segment.

Although IBM did not reveal the deal size, industry sources said it could be somewhere between Rs 700-Rs 750 crore (Rs 7-Rs 7.50 billion).

So far, the largest deal was that of Wipro's acquisition of Spectramind at Rs 470 crore (Rs 4.70 billion) in 2002.

Last year also, there were quite a few M&A deals in India.

In October, Datamatics Technologies acquired the Detroit-based CorPay Solutions in a deal believed to be in the region of $13 million.

In November, Essar Group, along with Deutsche Communications, acquired Aegis Communications Inc for $28.7 million.

Daksh eServices had also made its mark in M&A by buying Etelcare International in a deal in the range of $30-40 million.

In July last year, the US-based Perot System bought Healthsource India Pvt Ltd for $10 million.