Serco creates $1-bn BPO unit, eyes $2 bn in revenue over 4 yrs

UK-based Serco, the $7-billion services company, on Thursday announced the creation of a business process outsourcing (BPO) division, Global Services, that aims to generate $2 billion in revenue over four years.

After acquiring city-based BPO company Intelenet for ($634 million) last year, Serco would soon close deals worth $1.3 billion. It did not disclose any further detail, but the top management said it would make announcements about these deals over the next 15 days.

Susir Kumar, executive chairman-designate, Global Services, said, “With a BPO division that is almost $1 billion in size, it gives us access to larger deals. It would not have been possible earlier to win for both Serco or Intelenet on an individual basis.”

Global Services is expected to hit $1 billion in revenue by the end of this year and has been created by consolidating all the acquisitions that the company has done.

The consolidation includes The Listening Company in UK, Excelior in Australia and Delhi-based Infovision.

The company has identified four business divisions that focus on the Americas, UK, Europe, West Asia and Africa, and offshore delivery. These units will be headed by Steve Sieke, David Poole, Bhupendra Singh and Chandramouli, respectively.

Kumar will be responsible for strategy and the road map of the company, whereas Tom Riall, CEO-designate, will be responsible for the day to day operations.

“The unit has a diverse presence both onshore and offshore. Serco had a formidable presence in the front-end capabilities but with these acquisitions and consolidation it will also have both middle and back office capabilities,” said Kumar.

Global Services will have a workforce of around 50,000, with over 150 clients, and a presence in 10 countries. The business will focus on five vertical markets – namely banking, Financial services & insurance; travel, hospitality & transportation; healthcare, utility, retail & manufacturing; telecom, technology & online services; and media, education & government.

It aims to be among the top 10 BPO players globally, top five in Europe and the top four in India. In addition, it aims to be the largest supplier of services in the domestic BPO market.

Having consolidated the BPO operations, the next focus will be on growth and transformation. “The initial signs of the success of the consolidation is evident from the fact we will soon sign two large deals with a total contract value of $1.3 billion. Add to this we have a pipeline of contracts worth $600-800 million. We are aiming to double our revenue by 2016,” added Kumar.

With the consolidation the Global Services division will have about 40 per cent of its businesses from the public sector and 60 per cent from the private sector. About 60 per cent of their revenues will come from delivery in onshore locations and about 40 per cent from offshore delivery locations including India domestic business. About 20 per cent of their revenues will come from the fast growing and emerging markets including India, Middle East, Australia and Africa and 80 per cent will be from the developed markets comprising of US and UK-Europe.

The combined BPO unit that has presence in 98 locations, will also focus on rationalising. This will include moving to tier II and III cities in India and Philippines. In markets like US and UK it will be about moving sub-scale units to larger scale. From a delivery point of view, India and Philippines are two regions which have the largest headcount from offshore perspective, and UK will be the largest in terms of onsite presence with 10,000 employees spread across 27 locations.

The Global Services division will foray into markets like Africa, China, Latin America and South America. “We will look at both organic and inorganic route to enter these markets,” said Kumar.

With this consolidation the Intelenet brand will be discontinued.