Progeon on a rapid expansion path

Scaling up Cisco, BT work, signing up american commodities MNC

Progeon, the BPO subsidiary of Infosys, will significantly enhance its quantum of work for British Telecom (BT) and Cisco in the near future.

The company is also about to start offering BPO services to a US-headquartered commodities multinational, the work for which should start early next quarter.

Progeon, while increasing the scope of work for Cisco, has opted out of the tech support business for Cisco.

Instead, it is focusing on order processing work for the network equipment major. The tech support work is likely to be handled by Infosys along with the other services Infosys does for Cisco.

Progeon currently has 500 agents on the Cisco contract, processing from India multi-million dollar worth of orders.

On the other hand, BT Retail has entered into a contract with Progeon and HCL EServe to create two new next-generation contact centres in New Delhi and Bangalore.

These centres will initially carry out work in the areas of conferencing, directories and consumer support.

They are modeled on facilities like BT's broadband contact centre in Newcastle and are designated as next generation contact centres. BT has committed 2,200 seats to deliver these operations in India and Progeon is hoping to get at least 50 per cent of this.

Progeon's relationship is focused predominantly on supporting BT directories' activity, which includes online and offline work. Progeon has around 100 agents currently working for BT at its centre in Bangalore and "this will also be expanded over this financial year", says an industry analyst at a leading brokerage.

Progeon currently has some 17 clients and is expected to start work with a commodities MNC offering financial and accounting services. It is learnt that the transitionis almost complete and work is expected to start within a month.

Said the analyst: "The debate on outsourcing is in a way helping the Indian companies. Every other corporation in the US is aware of Indian BPO services and this is making 'opening-the-doors' that much easier. We expect the BPO/ITES revenue growth to accelerate in FY05 as larger IT companies are investing in marketing infrastructure, leveraging existing IT services clients for BPO business and widening BPO services offerings." This sector grew by 50 per cent in FY04 to $3.6 billion.

Added the analyst: "We expect the BPO revenues to become sizable for most Indian IT companies by FY06. We believe that a moderate 20-25 per cent EBITDA margin is achievable in BPO once a critical mass of over 5,000 employees is reached. While the non-voice BPO services are growing at a faster pace, voice-based BPO services (75-80 per cent of current BPO exports) is expected to continue to be a large portion of the BPO exports in the medium term."

Progeon currently has a total manpower of 2,500 and for the first quarter of the current fiscal it had reported a topline of $7.2 million.

Changing horizon

• Moves out of Cisco tech support business
• BT retail enters into contract for next-generation contact centres
• To support BT's directories' activity