IKYA Human Capital Solutions acquires Magna Infotech for Rs.100 Crore

IKYA Human Capital Solutions reported it had acquired Hyderabad based Magna Infotech for Rs 100 crore. IKYA Human Capital Solutions is a Bangalore based integrated solutions firm. Magna Infotech is a tech staffing firm with around 5,000 staff and nearly 400 different IT skills. The combined entity would make Ikya a 30,000-staff strong manpower firm.

Magna Infotech was established in 1997 and has geographical presence in Hyderabad, Bangalore, Chennai, Delhi, Kolkata, Mumbai and Pune. This investment comes as the latest and the third in Ikya’s line of investments. Last year in November, Ikya had acquired Delhi-based recruitment firm Coachieve.  It also acquired Avon Management services - a facilities management company offering housekeeping and maintenance services.

Ikya competes with domestic rivals such as Team Lease apart from multinational staffing firms including Adecco. Ikya has two major stakeholders with Private Equity fund India Equity Partners (IEP) and Ajit Isaac. Isaac during 2004 sold PeopleOne to Adecco. In 2008, it had received $ 8 million VC funding from India Equity Partners.

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. 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 per cent.

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.

Ikya is 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. With around Rs240 crore in revenues, Ikya has picked up an investment pace that is increasing its portfolio sustainably.

14 Nov 2010.