Godrej freezes call center deal for $1 million

by Amit Tripathi    Oct 08, 2003

The Godrej group is seizing the opportunity of acquiring a US-based call center for less than $1 million.

Lawkim, a firm belonging to the Godrej group, is buying a portion of Up Stream, the call center subsidiary of Rosenbluth, a global travel management firm that was taken over by American Express in July.

Up Stream generates around $25 million in revenues from its call center activities, which is now being acquired by Godrej.

Playing on years of experience, Godrej has made the investment in a currently slumping market scenario. The call center industry is plagued with controversies over do-not-call registries, and is facing stiff competition, unlike its earlier high-flying image.

According to industry experts, the amount that Godrej is paying for the call center is peanuts, indicative of how fast the valuations of call center businesses have fallen.

“It has become a commodity business now and those sky-high valuations have disappeared, according to industry experts.

The lawsuits involving the do-not-call-registries, and stiff competition from several players who have sensed a business opportunity, have played spoilsport, analysts said.

Courts are deadlocked over the do-not-call registry issue, under which telemarketers are barred from calling people who have voluntarily submitted their names to the list.

The controversy has not just hurt business but also cost jobs. Six Hyderabad based companies with capacity of over 500 seats have either shut shop or are close to doing so.

Lawkim generates about half of its revenues from the sale of electric motors for the light engineering industry. Last year, it diversified into IT-enabled services by striking a joint venture with Up Stream to set up a 600-seat capacity voice, e-mail and chat services call center in Mumbai. The joint venture was called Lawkim Up Stream.

Up Stream runs six contact centers, employing 1,100 people in the US. The India center last year was its seventh facility, funded by Rosenbluth, the Philadelphia-based firm.

The US-based Blackstone group, which advised Rosenbluth on the American Express transaction, also presided over the second deal with the Godrej group.