Hinduja Global Solutions (HGS), the business process outsourcing (BPO) arm of the Hinduja Group, made headlines last month by acquiring two companies in two weeks. It now plans to follow a two-pronged strategy — look for acquisition targets which will not only give them domain capability but also entry into newer geographies. The company believes that as opposed to the general view that Indian BPOs are taking away jobs from the US, it is, in fact, creating jobs there. Partha Desarkar, the Global CEO, discusses the company’s changing strategy with Piyali Mandal and Bibhu Ranjan Mishra. Edited excerpts:
Last month saw a spurt in your M&A (mergers and acquisitions) activity, with two acquisitions made in a short span. Why this increased focus on M&A?
Customer relationship management (CRM) is a sweet spot for us and we are concentrating on that. Our new acquisition (OLS) in Canada not only builds on our sweet spot but also gives us entry into a new market. The acquisition of HCCA Business Services gave us entry into a newer horizontal altogether, human resource outsourcing (HRO). We are adopting a two-pronged strategy for the acquisition – getting into newer markets and filling up the service gap in our portfolio, and this will continue further.
How would these acquisitions reflect on your cash balance?
At present, the acquisitions are financed through equity. We are planning to restructure our debt-equity ratio to 2:1, which is expected to be done in a month or two.
What are the new geographies and verticals you are eyeing?
We are very strong in CRM. So, we may do something different in this space only. We are also looking at newer markets such as central and Latin America. China was also on the radar for sometime, but we are yet to crack that market. We have continual interest in the non-voice space, especially in the finance and accounting, and legal process outsourcing space.
In the wake of the recent economic uncertainties, especially in the US, do you think global clients will cut their back-office spends?
No. They will put more pressure on them to optimise cost and outsource. As far as HGS is concerned, we don’t see any pressure on our business. We have grown at the rate of 20 per cent last year and this year too, we will grow at over 25 per cent.
What is your take on the perception in the US and UK that Indian BPOs are taking away their jobs?
About 67 per cent of our work is done onshore. The offshore component is very small. So, we are not taking away jobs from America, but creating jobs there. Today, we have about 5,000 people located at various centres in the US, Canada and the UK. This is about 25 per cent of our total workforce. Of that, about 2,000 each are located in North America and Canada.
What is the future of voice BPO? Leading players seem no-longer interested in pure voice services?
Outbound tele-marketing has probably seen its days. This comes under the low-end voice category. Today, our non-voice business is one-fifth of our overall business. I wouldn’t be complaining if we could raise the non-voice share to 30-33 per cent. In the voice BPO space, Philippines have caught up fast with India and have emerged as a lucrative destination.
Is it because of the cost arbitrage Philippines offer?
While cost is one of the reasons, finding the right kind of people is a major factor. BPO as a career is not seen in the same light in Philippines as it is in India. So, our ability to attract the right kind of talents in India is weaning off. However, to attract talents to the industry is not an issue in Philippines.
Are you finding difficulty to attract right talents?
Yes, of course. We have seen a dip in the quality of people who want to join the industry. In 2000-2005, we had the crème de la crème students who joined us after colleges. Now, the aspirations of such students have changed and are unwilling to join BPO firms.
