TCS Strengthens its BPO Ambitions with AFS Acquisition

With profits of software service companies rapidly plummeting southwards, BPO has become the latest buzzword in the Indian IT industry. Even India’s largest software service company, the Rs 4,800 crore TCS seems to be bitten hard by the BPO bug. It already had a substantial presence in the BPO domain thanks to Intelenet, its 50:50 JV with HDFC. However, today it is raising its stake further in the BPO bandwagon by acquiring Airline Financial Support Services (AFS), a JV it had with Swissair.

Till yesterday, Swissair had 75 percent stake in AFS while the balance 25 percent was held by TCS. According to unofficial reports, TCS is acquiring a majority stake in AFS following the exit of Swissair from the company. AFS, which began its operations in 1992 with 28 employees, has been one of the earliest entrants in BPO and currently has around 400 employees. With Swissair globally in financial doldrums since 9/11, today’s acquisition was long time in the offing.

Though AFS has been primarily catering to airline revenue accounting, it has also been servicing some other processes. Apart from Swissair itself, some of its other customers include Qualiflyer, SN Brussels Airlines and Austrian Airlines among others.

Today’s acquisition followed a due diligence and valuation exercise for the last six months.

In its software services avatar, TCS has been servicing airline clients like British Airways, Northwest Airlines, Bahrain Airport Services, Boeing and Singapore Airlines. With the acquisition of AFS, it gives TCS extra muscles to leverage these existing clients for BPO operations too. While WNS and Kale Consultants have been strong BPO players in the airline domain in India, now TCS too promises to obtain a strong foothold.

There have been rumours that TCS would also increase its stake in Intelenet, while Tata Sons would be doing the same in its 50:50 JV with Sitel US for the Sitel India operations. 

Rajneesh Dey