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Bengaluru-headquartered staffing firm TeamLease Services Ltd on Monday announced that it has signed a definitive agreement to acquire ASAP Info Systems for an enterprise value of ₹67 crore.
The acquisition marks the entry of TeamLease into IT staffing, where it will compete with established players such as Randstad and Kelly Services.
The acquisition will be made through its wholly-owned subsidiary, TeamLease Staffing Services, subject to customary closing conditions and regulatory approvals.
The transaction, which will be immediately accretive to TeamLease’s earnings per share, will be financed with existing financial resources, and is expected to close before the end of August.
ASAP is a Bengaluru-based, Tier-1 IT staffing solutions provider with revenue of approximately ₹63 crore in FY 2016.
The company provides IT staffing solutions to various multinational and domestic companies, with over 1,000 associates and a core employee base of 171, as of today.
“We have been in dialogue with multiple companies over the last 12 months and decided on ASAP because we liked the company structure, its client base and performance. While ASAP’s associate base is less than 1 per cent of our 1,10,000 associate base, and its topline is 2.5 per cent of our topline of ₹2,500 crore; its EBIDTA is over 25 per cent of our EBIDTA at ₹11 crore in FY 2016,” Ashok Reddy, co-founder and Managing Director of TeamLease Services Ltd told BusinessLine .
So far, TeamLease has shied away from IT staffing as the company was uncomfortable with the “bench ask” of 10 per cent, wherein, if they provided 100 IT staff to an IT firm, they were required to keep 10 bench staff (idle resources) with no payment made, until their services were required.
“The IT industry’s hiring model has changed where they no longer have a ‘bench ask’ and therefore, we decided to get into IT staffing. This acquisition complements our staffing business and creates an opening balance for TeamLease to build an IT staffing business, which is in sync with our strategy of margin expansion through new product verticals and new client segments,” said Reddy. TeamLease has long serviced IT companies for non-IT staffing positions in Finance, Administration, etc.
Asked whether all ASAP employees will be absorbed into TeamLease, which has 1,200 employees, Reddy said: “While the horizontal functions such as Finance, HR, Admin and IT of ASAP will align with TeamLease, their recruiters and client servicing teams will continue as usual. Since TeamLease is also growing, there will be enough scope to absorb all 171 employees.”
KJ Suwresh, Director, ASAP Info Systems, said: “Their vision of ‘Putting India to Work’ resonated with us. We are confident our combined capabilities and resources will create a formidable force in IT staffing.”
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