SoftBank's Shift to Buyouts in India
SoftBank is moving beyond its usual role as a growth- and late-stage technology investor in India. The Japanese conglomerate, led by Masayoshi Son, is now eyeing direct acquisitions of companies. This marks a strategic pivot towards buyouts in the Indian market.
One notable example is SoftBank's talks to acquire AGS Health, a business process outsourcing (BPO) firm, in a deal possibly worth $1 billion. However, those discussions did not lead to a transaction, with global asset manager Blackstone taking the lead instead.
The company is also in conversations with other outsourcing firms like WNS Global. SoftBank is focused on merging artificial intelligence capabilities with large-scale services delivery, either through acquisitions or strategic partnerships.
Since India lacks large-scale AI foundational models like OpenAI or Anthropic, SoftBank aims to accelerate AI adoption across the outsourcing sector. They see an opportunity to disrupt traditional IT-enabled services by integrating AI technologies.
“SoftBank is meeting IT services firms that are ripe for disruption due to AI,” said a source familiar with the plans. “They are evaluating small to mid-sized firms in sectors such as financial services, healthcare, and legal. As a technology investor, they believe they can provide the resources needed to deploy AI effectively.”
SoftBank and the companies involved have not publicly commented on these developments.
SoftBank’s Vision for AI in India
SoftBank has developed a close relationship with OpenAI’s CEO Sam Altman, even as OpenAI reportedly distances itself from Microsoft. The goal is to transform traditional BPOs and knowledge process outsourcing (KPO) firms into technology-enhanced service providers. This transformation is expected to deliver cost efficiencies and boost revenue growth for clients through AI-driven solutions.
SoftBank Vision Fund, which has invested $160 billion globally, is also looking at opportunities in AI infrastructure and data centers in India. This aligns with the global surge in AI interest following the release of ChatGPT in late 2022.
Alex Clavel, CEO of SoftBank Investment Advisers, noted last year that India’s digital and tech infrastructure provides a solid foundation for AI development. SoftBank’s interest in Indian IT-enabled services complements its broader push into global AI infrastructure.
IT-enabled services (ITeS) cover a range of business functions supported by technology, including customer support, data processing, finance and accounting, and healthcare back-office operations. SoftBank sees AI integration as a way to upgrade these services significantly.
As part of this strategy, SoftBank launched The Stargate Project, a $500 billion initiative over four years, aimed at building AI infrastructure in the US to support OpenAI. They are also developing an advanced enterprise AI solution called Cristal Intelligence in collaboration with OpenAI.
Announced earlier this year in Tokyo, Cristal Intelligence is designed to create AI agents capable of learning and adapting to enterprise needs. OpenAI contributes research and engineering expertise, while SoftBank provides sales teams and technical support to scale deployment.
In the US, SoftBank has proposed a $1 trillion AI and robotics manufacturing industrial zone in Arizona, modeled after Shenzhen, China. The project, called 'Crystal Land,' would include R&D labs, production facilities focused on artificial general intelligence (AGI), advanced semiconductor processing, tech workforce housing, and smart grid integration. The company has approached state governments and federal agencies about tax incentives for this plan.
SoftBank’s Changing Investment Approach in India
SoftBank has been a significant investor in India through its Vision Fund, backing startups like Swiggy, Delhivery, Paytm, and Ola Electric. After pausing fresh investments for a few years, SoftBank resumed deal scouting last year, looking at opportunities in the $30 million to $40 million range.
Although discussions to invest in startups like wearables firm Ultrahuman did not materialize, SoftBank’s approach remains flexible. Sumer Juneja, managing partner for India and EMEA at SoftBank, indicated that while initial investments may be smaller, the firm is ready to increase funding as companies grow.
This new focus on buyouts and AI integration suggests SoftBank is aiming to play a more active role in shaping the future of IT-enabled services in India. For operations professionals, this could signal increased availability of AI-enhanced outsourcing services and new partnership opportunities.
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