BANGALORE: AJIT Isaac, who sold his PeopleOne Consulting to Swiss staffing giant Adecco six years ago, has acquired Hyderabad-based tech staffing firm Magna Infotech for Rs100 crore.
Company officials, who requested anonymity because an integration process is yet to begin, said a definitive agreement has already been signed.
As demand for temporary software programmers picks up, outsourcing companies are increasingly looking to avoid adding more staff on their payroll, and are instead sub-contracting projects to companies such as Magna. Already, the Indian contracted staff market is expected to become around $2.5 billion industry in five years.
Mr Isaac, the CEO of Ikya Human Capital Solutions , confirmed the transaction and said the combined entity would make Ikya a 30,000-staff strong manpower firm. He declined to share other specific details, but people familiar with the acquisition said Magna had revenues of around Rs89 crore in 2009, and aims to double that to Rs180 crore during year ending March 2011.
“We are reaching a critical mass and could potentially become the first HR services firm to be listed on an Indian stock exchange in the coming years,” said Mr Isaac. Magna has around 5,000 staff with nearly 400 different IT skills.
“This relationship will help us scale this to 10,000 people,” said Pradeep Mittal, who heads Magna’s Indian operations. “This has just started picking up in India and is gaining acceptance among companies,” he added.
With around Rs240 crore in revenues, Ikya competes with domestic rivals such as Team Lease apart from multinational staffing firms including Adecco. “We want to be a standalone major in the emerging markets and then explore other developed countries,” added Mr Isaac.
In November last year, Ikya had acquired Delhi-based recruitment firm Coachieve for an undisclosed amount. Ikya had raised around $8 million from India Equity Partners , together with Mr Isaac who holds a majority stake in the company. As demand for more temporary IT staff gains momentum, firms such as Magna will face challenges of taking it to the next level. Another driver for hiring more temporary staff is that IT firms want to arrest their linear-people-led growth. Moreover, temporary staffing helps in bringing down people costs by at least 25%.
“Because this is still not a mature industry getting working capital loans from banks is a huge challenge. You need investors backing you to scale,” said one of the officials at a temporary staffing firm.
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