Offshore BPO company Genpact Ltd on Wednesday announced that it will acquire Headstrong Corporation — a consulting and IT services firm with a specialised focus on capital markets and healthcare domains — for $550 million (Rs 2,420 crore) in cash.

Genpact hopes to ride on Headstrong's domain expertise in asset management, derivatives, wealth management, prime brokerage, reference data, compliance and mortgages, to gain a foothold in the “complex but highly attractive” capital markets industry vertical.

“Capital market is not an area that many people play in…Our combination is powerful and competitively it places us as a leader in this vertical,” Genpact President and CEO, Mr Pramod Bhasin, said.

The transaction, being funded by a mix of cash and acquisition financing, is expected to close by May 31, 2011. “We will utilise our cash reserves to the extent of $300 million, and another $250 million will come by way of debt. This will leave us with almost $50 million cash on our balancesheet,” he said. Market watchers say that the deal would enable Genpact to turbo charge its IT business (which contributed 14 per cent to Genpact's 2010 revenue) and also go after integrated IT-BPO deals. “Headstrong is very focused on capital markets and has large investment banks as clients and so Genpact will get access to new clients. On the flip side, Genpact will now compete directly in IT deals with players such as Wipro and Cognizant. We have to see how it manages this positioning,” Mr Nikhil Rajpal, Partner, Everest Group, said.

The US-based $217-million company Headstrong which has 3,700 employees, counts nine of the world's top ten investment banks and three of the top five asset managers in its clientele. It generates a significant amount of revenue from employees who are onsite with clients in the US, the UK and Japan. This is the second big ticket deal in the IT and BPO landscape in 2011 after iGate-led consortium clinched a deal to acquire Patni Computer for $1.22 billion.

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