Sub-prime fear now haunts BPOs

OPEN POSITIONS (The BPO industry's exposure to the banking, financial services and insurance industry)
Company	Revenue share (in %)
EXL Services	70.00
Genpact	44.50
TCS	43.00
Mphasis	42.00
Firstsource	37*
Infosys	36.00
Wipro	24.00
Satyam	24.00
HCL Tech	28.00
* As on end June 2007

The BFSI segment currently accounts for 44.5 per cent of the total revenue of Genpact -- the largest BPO services provider in India. The company declined to comment, stating it was in a quiet period. Aditya Birla Minacs, a subsidiary of Aditya Birla Nuvo, has two customers in the mortgage services.

Firstsource, a pure-play BPO services company, maintained it has not been affected by the mortgage crisis. The company has only one UK-based client servicing the mortgage segment. "While we do have one client offering mortgage services, its exposure is restricted to the UK markets," said the spokesperson.

Biggies like TCS, Wipro and HCL maintained the crisis will not affect them. A TCS spokesperson said: "We have no exposure to subprime lending and hence do not foresee any impact on our revenues from the BFSI vertical."

Likewise, Girish S Paranjpe, President of Finance Solutions Division, Wipro Technologies, reasoned: "Our exposure to the subprime market is less than 1 per cent."

"HCL's exposure to the US mortgage industry is mainly with the banks with mortgage lending operations (not with pure-play mortgage lenders which specialise in all kinds of mortgages including sub-prime and Alt-A). To that extent, there is no significant impact," said an HCL Technologies spokesperson.

Alok Shende, director, ICT practice, Frost and Sullivan, said, "The full impact is yet to be understood. However, there will be a psychological impact as customers may reduce spending. It might also lead to delay in the deal cycles as clients would like to wait for some stability."

Siddharth Pai, partner at outsourcing consultancy firm TPI, concurs: "I think it is early to comment. The size of the entire subprime portfolio is small in comparison to the entire mortgage outstanding, so we hope the exposure is limited to a few institutions." Likewise, others are waiting for the story to unfold.