Mphasis BPO to break even this quarter: Hinduja Global Solutions

Hinduja Global Solutions  which acquired the business processing and outsourcing (BPO) arm of Mphasis in July 2015, expects this business to break even in the March 2016 quarter and start adding to its earnings from the June 2016 quarter onwards.

“Mphasis has been a great story for us because we bought it very cheap. It gave us a good footprint in India. Mphasis business has posted losses in the December 2015 quarter on the back of integration costs and some changes we are driving. We expect it to break even in Q4FY16 and it will become EPS accretive Q1FY17 onwards," says Partha DeSarkar, chief executive, Hinduja Global Solutions.

The company's financial performance has been impacted in recent quarters due to pressure in its Canada business (close to 12% of revenue). In the December quarter as well, this market continued to witness some pressure. Weakness in telecom, adverse cross currency move and withdrawal of tax benefits are key factors impacting this business. Going forward though things seem to be stabilising.

Though the Canada business achieved break even in December 2015, management believes Canada will start contributing to earnings March 2016 quarter onwards.

"Canada revenue is 12% currently and could go back to 14-15% in once the full year numbers stabilse," adds DeSarkar.

The management also believes its EBITDA margins appear to have bottomed out and should improve from here on. Ramp up costs towards staff hiring and training have impacted margins. Management believes these investments will lead to higher revenues going forward and enable the company to improve its exit rates for this fiscal. Healthcare and telecom are likely to be key growth drivers going forward. The management expects to touch $500 million revenues in FY16.