Recruitment firm TeamLease Services Ltd said it entered into an agreement with HR services company E Centric Solutions Private Ltd to acquire its IT staffing business.
Incorporated in 2014, Hyderabad-based E Centric currently has over 100 core employees, 880 associates deployed across more than 20 clients. It reported a revenue of over Rs 45 crore for the fiscal year 2017-18.
As per the agreement, E Centric shall sell its IT staffing vertical to TeamLease Digital Private Ltd (TL Digital), the wholly-owned subsidiary of TeamLease Services via ‘slump sale agreement’.
Slump sale refers to to a sale where no particular value is given to the assets and liabilities of a business. It is known as a going-concern transfer or an as-is transfer. A going-concern transfer means that an entity will remain in business in the near future.
TeamLease said the deal value will be equivalent to 4.5 times the proportionate profit before tax of the target business. The amount will be paid in two tranches—85% on transfer of clients and the remaining after six months of transition support, the company said.
Stating that India’s IT industry employs 0.7% of India’s labour force but generates about 7% of GDP, TeamLease said it expects the share of organized staffing to go up from the current 5% of the total IT employment.
TeamLease has struck a number of acquisitions over the past couple of years. In November, it acquired a 40% stake in Mumbai-based education technology startup Schoolguru.
In May, it agreed to acquire a 30% stake in Bengaluru-based Cassius Technologies Pvt. Ltd, which runs job site Freshersworld. Prior to that, it had bought Bengaluru-based Keystone Business Solutions Pvt. Ltd to strengthen its IT staffing vertical.
Headquartered in Bengaluru, TeamLease Services operates as a temporary staffing firm and provides human resource services to various industries.
Its segments include staffing operations, recruitment operations and training operations. It works across industry verticals, including consumer durables, retail, telecom, chemical, e-commerce, pharmaceuticals and healthcare sectors.
TeamLease also offers permanent staffing services. It has hired 17 lakh people over the past 17 years. The company posted net sales of Rs 3,440 crore for 2017-18, up from Rs 2,991 crore the year before.