Good morning. It’s been a crazy 24 hours, with heavy rains, flooded streets and an earthquake in Delhi-NCR. No dearth of excitement in this city, that’s for sure. (Make it stop. Please!)
On Tuesday, I wrote that Jio BlackRock’s funds came with zero brokerage, commission and expense ratio. As sharp-eyed reader Varun Fatehpuria pointed out, I had made a mistake. While the first two are true, the third is not. The funds charge expense ratios between 0.1 -0.15 per cent. My apologies.
And while we are here, one more housekeeping note: I am away next week. My colleague John Reed, the FT’s South Asia bureau chief, will be standing in for me. Make sure to send him plenty of questions!
Capgemini acquires WNS
Capgemini, the technology and consulting company, is acquiring the India-grown business process services company WNS for $3.3bn. This is a significant deal for the sector, with WNS providing outsourcing services to more than 700 clients including British Gas, Virgin Atlantic and Coca-Cola. Shares in WNS rose 14 per cent on the announcement, almost reaching the acquisition price of $76.50, even as Capgemini lost 5 per cent on the news.
The deal will help France’s Capgemini expand its operations in the US — where WNS has several key clients — as well as offer a wider basket of services. More significantly, Capgemini’s chief executive Aiman Ezzat emphasised that it was buying the NYSE-listed company to support clients with “AI-powered business process transformation” and that the strategic opportunity was now in “agentic AI-powered intelligent operations”. Agentic AI refers to technology that can make autonomous decisions and accomplish certain tasks with minimal supervision.
Why is this significant? Analysts and leaders of the business process services industry have feared for some time that it would be one of the first sectors to see significant disruption from artificial intelligence. But Ezzat’s comments, and Capgemini’s acquisition of a company with nearly 65,000 employees, demonstrate that the BPS industry will use AI to augment the performance of its human assets and not necessarily replace them — at least for the foreseeable future. The industry has been racing to incorporate creative AI solutions to accomplish basic tasks, allowing human interface to move up the value chain to solve more complex problems. Last year, WNS said 5 per cent of its revenue came from AI-powered solutions, which probably made it more attractive to Capgemini.
India’s business process services industry is now almost three decades old. In my previous life working on M&A for HCL Technologies, the first project I was involved with was the acquisition of a British Telecom call centre in Belfast. This was in the early days of the business, which began primarily as a way for large corporations to outsource their customer care function. But the sector has since expanded its offerings to include accounting, technology, manpower vetting and many others. It has also grown in terms of the geographical and sectoral spread of clients. The industry is ripe for consolidation and WNS’s sale will be a catalyst, as both service providers and clients grapple with the major changes brought by a rapidly evolving technology.
Do you think the Indian BPS industry will be adversely affected by AI? Hit reply or email me at indiabrief@ft.com
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Government guidelines boost Rapido
After months of ambiguity, the central government has stepped in and established guidelines for two-wheeler ride hailing services. This is (somewhat) good news for Rapido, which has been facing a difficult time ever since the Karnataka government banned bike taxi services in the state.
Several local authorities had disallowed these ridesharing apps on the legal basis that privately owned vehicles should not be used for public transport. But the truth is many state governments have faced heavy lobbying from local taxi and three-wheeler operators that do not want the increased competition. While the central government’s recent move helps lower the barriers for operators such as Uber Moto and Rapido, these apps will still need permission from individual states to operate.
Two-wheeler ride hailing apps are a blessing or a curse, depending on who you ask. Customers love them as a lower-cost, quicker means of navigating urban India’s clogged streets. For example, Rapido had 150,000 “captains” in Bengaluru alone before the state ban, notching up more than 5mn rides every month. The city’s constantly jammed roads and patchy metro coverage drove demand. At the same time, ironically, it is at least partly due to the massive proliferation of such services that the streets are clogged.
With the continued uncertainty about its operations, Rapido has been trying to add other revenue streams. Last month, it announced a pilot run for its food delivery service, Ownly, hoping to challenge dominant players Zomato and Swiggy. The latter is, incidentally, also an investor in Rapido. In a departure from the incumbents’ commission-based model, Rapido plans to charge a tier-based flat fee on delivery orders. This will be an interesting pilot to watch, not least because both Swiggy and Zomato are already dealing with falling revenues in their food delivery business.
More broadly, while such gig work on two-wheelers has helped create substantial numbers of jobs these past few years, we are beginning to see the natural limits of these models. There are only so many food or grocery orders to be delivered and people to be ferried. Capital markets are already frustrated, as the general trajectory of Swiggy and Zomato’s share prices show. For others, venture capital funding will run out at some point. These companies and their vast armies of riders have to figure out a plan B sooner rather than later.
Go figure
US short seller Viceroy Research has published a scathing report about Vedanta Group, with local media comparing this move to that of Hindenburg’s research against Adani. Vedanta has dismissed the report as “false propaganda”. Here are some highlights of the allegation and its impact.
338mn
Brand fee transferred from subsidiaries
Read, hear, watch
In one of our internal sessions, Robin Harding (who often steps in and writes this newsletter when I am away) talked about Andrew Ross Sorkin’s book Too Big To Fail.
I haven’t read it, and will be taking it with me during my travels. But I’ll get into it only once the stress of the Wimbledon finals abates. Do you have any predictions? Tonight’s Sinner versus Djokovic semi-final promises to be a great match. Who is your favourite?
Hit reply or write to me at indiabrief@ft.com
Buzzer round
If you go to Paris this summer, what are you free to do that you weren’t legally allowed to for the past 100 years?
Send your answer to indiabrief@ft.com and check Tuesday’s newsletter to see if you were the first one to get it right.
Quick answer
On Tuesday, we asked: Should moonlighting be an accepted practice? Here are the results. While those who think it should not be are in the majority, they have won by a thin margin!
Thank you for reading. India Business Briefing is edited by Tee Zhuo. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.
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