More BPO firms to look for buys in US as valuations dip

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‘This year and next will be tough for IT & BPO’

Mumbai, Aug 6: The economic slowdown in the US will prompt Indian BPO (business process outsourcing) firms to scout for opportunities to acquire companies in that country at lower valuations. Both large and medium companies will try to explore opportunities, say analysts. However, it's the larger companies which will be taking a much more aggressive stance as they are likely to have stronger cash and strategic resources.

"At the moment, valuations in the US look pretty attractive, and thus, it's the right time for companies to exploit the situation," commented Anurag Purohit, associate vice-president, Religare Securities. Earlier this week, Aegis BPO, a part of the over $50-billion Essar Group, signed an agreement to merge with the Los Angeles-based PeopleSupport Inc, in an all cash deal valued at $250 million.

"Though the slowdown will continue for a couple of more quarters, it is not going to continue forever. Thus, when the US economy picks up again, outsourcing will gain momentum and the companies will see a number business opportunities," added Purohit.

Though businesses are getting delayed and sectors like BFSI (banking, financial services and insurance) and pure mortgages are hit by the slowdown, experts are of the opinion that the slowdown will also see an increase in outsourcing as a number of companies will try and do more business within their stipulated IT budget.