Spin-off of Samsung SDS
Samsung SDS announced on June 3 that it is looking to spin off its business process outsourcing (BPO) arm. The issue is expected to be discussed at a board of directors meeting scheduled for June 8 or later.
Specifically, the BPO unit in charge of the overseas logistics business of Samsung Electronics is expected to be merged with the general trading arm of Samsung C&T while the consulting system integration and IT outsourcing units are combined with Samsung Electronics and Miracom Inc., a Samsung SDS subsidiary, respectively. Samsung SDS recorded 8.728 trillion won in sales last year and its BPO arm accounted for 30% of it with a sales revenue of 2.6521 trillion won.
Experts point out that this attempt of Samsung SDS to sell the profitable business unit is for Samsung Group vice chairman Lee Jae-yong to have a firmer grip on the entire Samsung Group. As of the end of the first quarter of this year, he owned 17.08% shares in Samsung C&T, thereby controlling Samsung Electronics (4.12% owned by Samsung C&T and 0.58% owned by the vice chairman) and Samsung SDS (22.58% owned by Samsung C&T and 9.2% owned by the vice chairman).
The spin-off can result in a change in the rankings in the domestic IT service industry. At present, the top three of Samsung SDS, LG CNS and SK C&C are leading the market. After the spin-off, however, LG CNS is likely to rise to the top by beating Samsung SDS.