EDS Moves Toward Mphasis Buy

The company will boost its Indian head count by 11,000 employees.
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Electronic Data Systems

(EDS)

moved toward completing its purchase of a majority stake in

Mphasis

, in a bid to grow its business in India.

EDS has tendered 83 million shares, or the equivalent of $380 million in cash, for the controlling stake in the applications and business process outsourcing company. The deal should be finalized by the end of the month.

"The acquisition will not only bolster our current offshore delivery capabilities in priority growth areas but will also allow EDS to deliver a stronger value proposition to better align with clients' changing needs," EDS CEO Mike Jordan said in a statement.

The company said the purchase is one of the largest deals in the Indian IT services sector. With the addition of Mphasis, EDS will boost its Indian head count by 11,000. EDS currently has over 3,000 employees in India. By the end of the year, EDS said, its staff will exceed 20,000 people in the country.

Earlier this week, EDS competitor

IBM

(IBM) - Get Report

said it was

tripling its investment in India from $2 billion to $6 billion over the next three years.

Accenture

, meanwhile, is opening another facility in Pune, India, that will add 1,600 people to its payroll by August.

For its fiscal year ending March 2006, Mphasis reported annual revenue of $210 million and a profit of $33 million.

Mphasis management will remain with the company following the transaction.

Shares of EDS slipped 1.6%, or 40 cents, to $24.06, in trading on Thursday.