Firstsource Solutions to reduce domestic business loss via partial sell-off

Move to help the firm in reducing its servicing costs

The RP-Sanjiv Goenka group’s business process outsourcing wing Firstsource Solutions, has sold a part of its non-profitable domestic business.

In a notice to the BSE, the company said it had signed definitive agreements to sell a portion of its domestic business to Vertex Customer Management.

Firstsource, which is in the silent period, did not provide further details on the sale.

Sources said the deal would not affect Firstsource’s bottom line although there would be a dip in the top line. The move is designed to reduce loss-making and less-profitable accounts of Firstsource.

Group chairman Sanjiv Goenka had earlier indicated the company’s focus would be on its international business, particularly in the UK.

The Rs 12,000-crore deal with Sky last year had given the company fresh boost to explore its international operations.

Firstsource posted a 15.7 per cent decline in its net profit at Rs 65.3 crore during the March quarter, down from Rs 77.5 crore in the same period a year ago.

Goenka had said the fall was due to currency volatility as well as servicing costs for “unprofitable and less profitable accounts”. 

"For the operations in India which are unprofitable we'll re-look into the business," said Goenka on an earlier occasion.

Indian operations account for 5.8 per cent of the company's total turnover of Rs 3,556 crore, while its UK and US operations contribute 38 and 55.3 per cent respectively.

In the Q4 period of 2016-17, the company had reduced its headcount by 121. Currently, it has 15,446 employees in India and 10,425 employees abroad.

In its business outlook for the year, FSL said that the domestic business faces headwinds due to consolidation in the Indian telecom market and pressures on incumbent players due to aggressive marketing plans by Reliance Jio.