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IT majors look at outsourcing for growth
It?s the third leg of the business stool ? BPO ? that?s expected to drive growth six months down the line, reports Prerna K Mishra.
Even as software and application development at the Indian IT bellwethers continues at a hectic pace, it’s the third leg of the business stool — business process outsourcing — that’s expected to drive growth six months down the line.
The major impetus will come from Tata Consultancy Services which is busy consolidating its BPO entities under one umbrella.
“The bigger plan is to focus on transaction processing and offering the voice business only where it is part of a larger package. Six months down the line, we would have consolidated our BPO operations with a single point of interface,” said TCS executive vice-president Phiroze Vandrevala.
Adds TCS executive vice-president and head of global operations, N. Chandrasekaran, “Currently, all the offerings and capabilities of the different entities in the BPO area are being consolidated and we are providing a single face to the market.”
The company’s exit from Intelinet, where HDFC bought it out for Rs 161 crore, was the first step in the consolidation act. Now TCS is left with four fully owned companies in the BPO stable employing between 1,500 to 1,800 people.
While TCS is busy doing the mix and match to figure out how to optimise its BPO competencies, the group is not comfortable letting out the percentage of revenues presently coming from the BPO ventures. But, that is not true for other IT service companies that are riding high on the BPO wave.
“Wipro Spectramind probably would have made the highest revenue contribution to the parent company among IT services companies that also have a BPO subsidiary,” says Wipro Spectramind CEO Raman Roy.
In the first quarter of 2004-05, the subsidiary with revenues of over $30 million contributed nearly 10 to 11 per cent to the Wipro group’s total revenues.
Wipro Spectramind, which more than doubled its 2002-03 topline, saw the share of Wipro Technologies soaring in Wipro group’s total revenues in 2003-04.
While Wipro Tech contributed 68 per cent of the group’s total IT and services revenues, in combination with Spectramind’s turnover, it increased to 76 per cent. ‘We expect this synergy to grow further in the years to come,” adds Roy.
What is interesting is that from the time when Spectramind was acquired and contributed 2 to 3 per cent to the group revenues, the entity’s top line grew 165 per cent. It touched Rs 437 crore in 2003-04 and contributed 8 per cent of Wipro’s global IT revenues during the year. Its employee strength has gone up from 2,700 at the time of acquisition to over 10,000 today.
Post consolidation, HCL BPO Services — the BPO wing of the HCL Group — is also contributing nearly 8 to 10 per cent to the group’s Rs 3,884 crore revenues in 2003-04.
This includes revenues from HCL BPO Services in India and Ireland.
While Progeon — the BPO wing of Infosys — has a long way to go in order to reflect substantially in the group’s Rs 4,775 crore revenues, it hit revenues of Rs 78 crore in 2003-04 — a growth of 271 per cent from last year’s Rs 21 crore. The company employs nearly 2,000 people — up from 539 last year.
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TCS’ BPO kitty
