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Cover Story
 
INDIAN BPO INDUSTRY
“It players are expanding the reach”
Rohit Kapoor, President & CEO, EXL Services
Issue Date - 01/03/2012
 
B&E: Nasscom came out with a report that says that the IT-ITeS industry in India has crossed the $100 billion mark. What’s the next frontier for the industry in your view?
Rohit Kapoor (RK): It will continue to remain a growth industry, and will continue to grow in double digits. And it means that there will be terrific opportunities for the employees and the associated countries in the upcoming future as well, if we talk about EXL services. The BPO industry in India is still in its nascent stages, and I think growth over here will pick up in a gradual fashion. But it will take place for a sustained period of time. The reason for that is that it’s very difficult to extricate out processes, which are embedded in a client’s organisation. EXL has been growing very rapidly. For the last five years, our growth rate has been in excess of 35% CAGR. I think that the industry has quite a lot of things that need to be put in place. One, the customer is no longer looking for labour arbitrage, but is looking out for domain expertise and the ability of the provider to solve their pain points and business problems. And I think the investment that is required by the companies to make sure that they understand the client business and they can use different types of tools and techniques to help solve a customer’s problems (whether that be technology, a process, analytics, or some kind of a work flow) is really important.

B&E: How is the hiring process shaping up at EXL currently? Is the frenzy continuing as before?
RK: For the BPO industry, hiring continues to be fairly strong. Our headcount is around 18,000 employees, and last year, we hired around 3500 employees. We expect to hire in a similar fashion in 2012 and beyond as well. The hiring is being done in all the centres that we have; not only in Delhi NCR, but in Pune, Bangalore and Kochi as well. There is always a fair amount of hiring that we do for some of the knowledge processing work like decision analytics, operations and process excellence & risk and financial transformation. Those are higher skill set capabilities and we continue to hire there as well.

B&E: What’s your projected revenue, and how is inorganic growth helping your growth objectives?
RK: We expect to be at the top end of $354-358 million in revenue for the calendar year 2011. Certainly, there has been a diversification strategy that the BPO companies have gone for. Initially, they were purely India focused, but now they have got offices in multiple countries. For instance, EXL started its business entirely from India and now we have offices in more than 7 different countries. There are now multiple choices that our client has to access talent and to be able to get services. For EXL, we have always said that we would like to grow on an organic basis at a fast pace; and compliment that with mergers and acquisitions, preferably acquisitions. In 2011, we have acquired OPI, a financial and accounting BPO company for $100 million and also took over a portion of a business from Trumble for $250,000. We also acquired the captive operations of Life Pro, a life insurance business based in the US. Our objective ultimately is to run the customer’s back end operations. We have got to leverage that and apply that to any geography & any skill set and then provide that to our customers.

 
B&E: How do you see moving towards tier 2-3 cities as a viable business and growth option?
RK: I think you need to balance it out. There are certain advantages in terms of lower cost structure, but disadvantages as well in terms of non-availability of management talent and better infrastructure. Asking your senior members in the team to establish business in these cities is also one of the major challenges and what type of support you will get from the local government becomes critical. There are a number of tier 2 cities, which we find to be really attractive like Kochi, which is turning out pretty nicely for us in terms of the above mentioned points, as they largely govern the setting up of a center in the city.

B&E: How has the entry of IT leaders in the BPO space, affected the independent operators and the BPO industry?
RK: IT majors like Infosys, Wipro, et al getting into the industry validates the business model. IT also expands the market reach. When more companies are pitching for a client list, the market pie becomes bigger. We just have different value propositions in terms of how we go to a market and how we serve a customer and add value to him. Our approach as a pure play BPO company is much more business centric, domain centric and looks at how we can manage process, which is the real time process, in the most effective and efficient manner. In order to do that, we would use a combination of transformation, technology and process reengineering. To us, it’s a healthy sign in terms of size, relationships and brand equity, but we think we have got a very strong domain expertise, which resonates with our customers.
          

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