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"This acquisition is strategically important to Perot Systems and is the next logical step in development of our onshore and offshore application outsourcing capability. The acquisition of HCL's stake gives us tremendous critical mass in India and enhances our skills in application oursourcing,'' David Cohen, Managing Director of Perot Systems Europe Ltd., said at a news conference.
Perot Systems had bought out 43-44 per cent stake of HCL Technologies, Mr. Cohen said adding Perot would now hold "just under 90 per cent stake'' in the company while the balance would be with the management and employees.
Perot Systems would consolidate the results of HPS. Prior to this deal, Perot Systems recorded its pro-rata share of HPS' earnings using the equity method of accounting.
"The reason for the buy out is primarily our desire to reinforce our application capability. We believe that having run its life as a joint venture for seven years, it made sense for us to have complete control of it and to consolidate it under Perot,'' he said.
Admitting there had been problems between the two joint venture partners, Mr. Cohen said, "There were some differences but we were able to resolve them sensibly and the resolution of that is manifested in action (buy-out) you see today.''
Meanwhile, in a statement issued by HCL Technologies, its chairman and CEO, Shiv Nadar, said, "By this equitable agreement arrived at with Perot Systems, we also resolve channel and brand conflicts in the marketplace. It will help both the partners to pursue their goals independently.'' Mr. Cohen said there were no immediate plans to list the Indian venture.
He said the new name for the company would be announced in the first quarter of next year. The senior management of Perot along with senior management of HPS would chalk out in January the strategy for growing the company.
Though Perot will hold a substantial stake in the company post buy-out, Mr. Cohen said, "We want to play up the strengths of the company and want the company to expand in the marketplace.'' At present about 50 per cent of HPS' business accrues from Perot or Perot-related clients.
Asked if Perot would buy-back the remaining shares from management team, he said, "There will be opportunities for management to cash out. We are looking at various options.''
On whether the company would increase its outsourcing to India, Mr. Cohen said, "We will continue to grow our application work on an offshore basis. By virtue of owning this company, we will also consider infrastructure outsourcing, but we will take that question gradually.''
"I do not see a massive shift of jobs from North America to India but I see us getting more aggressive in seeing how we can leverage offshore capabilities in India,'' he said. Perot had earlier acquired a Chennai-based BPO company, Vision, which focuses claims processing for healthcare, he said adding Perot intended to expand its healthcare BPO practice. PTI
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