Hewlett-Packard-owned EDS closes in on Fidelity BPO

[dhilipkumar]

Hewlett-Packard-owned EDS closes in on Fidelity BPO

Hewlett-Packard (HP)-owned EDS is leading the race to acquire Fidelity's IT captive operations in India in a transaction worth roughly $150 million, three people close to the development said. ET has also learnt that the deal is expected to close in 3-4 weeks, with EDS securing a long-term outsourcing contract worth over $500 million from Fidelity, the world's largest mutual fund company.

Fidelity is also a significant client for Infosys Technologies, with over 3,000 employees working on the account. The domestic tech giant secures roughly $50 million annually from the contract. People familiar with the discussions said Fidelity could consolidate its outsourced work, if a deal with HP-EDS combine is concluded.

If this happens, Infosys could end up losing one of its top 10 clients. An Infosys spokesperson declined to comment on a specific query on the possibility of losing the Fidelity work.

A Fidelity spokesperson issued the following response when contacted by ET: "We do not comment on speculation." A spokesperson for HP also declined to comment for the above-mentioned reason.

ET had first reported on Fidelity's move to divest the IT captive in its edition dated December 15, 2008. The IT captive, Fidelity Management and Research (FMR) India, employs 2,000 people across Bangalore and Chennai centres, and supports Fidelity's operations in the US.

In fact, Infy was seen as a strong contender to acquire Fidelity's IT captive, but did not figure in the final shortlist that included HP-EDS, Accenture and probably IBM. However, a person close to the development said the Fidelity top brass in the US had factored in certain geo-political risks associated with the south Asian region, thus hinting that Indian IT majors would not have a level-playing field. He also added that the acquirer would need to have a global standing equivalent to Fidelity's.


While EDS has been present in India since 1996, it became a major player in the sub-continent after acquiring MphasiS in 2006 in a deal valued at over Rs 1,700 crore. The EDS-MphasiS combine currently employs more than 30,000 people in India.

Hewlett-Packard acquired EDS' global operations in a $13.9-billion deal in May last year, which helped it double its services revenues.


indiatimes