Genpacts BFSI revenue crosses 50%

Written by Diksha Dutta | Diksha Dutta | New Delhi | Updated: Jan 31 2012, 22:29pm hrs
Nine months after acquiring Headstrong for $550 million, Genpact, the country's largest BPO that is valued at $1.5 billion, can now clearly observe the after- effects and future prospects of this deal which made it stronger in the capital market domain.

Since the acquisition of Headstrong, the revenue from the banking, financial services and insurance (BFSI) vertical has now crossed 50% from the earlier 45% . Motivated by the tremendous growth in this space, the company is also looking at expanding in Europe and Australia, and not just being confined to North America. These new markets are expected to give Genpact 30% of the total BFSI revenue in the next 12-18 months.

In less than a year, BFSI as a vertical has crossed 50% of total revenues (in excess of $750 million) from approximately 45% before acquiring Headstrong, said Genpact senior vice-president and global leader (BFSI) Mohit Thukral. Of the 53,000 employees at Genpact, approximately 26,000 cater to the BFSI vertical.

He noted that the BPO is now also concentrating on the Australian and European markets apart from North America for the financial services vertical. Two years ago, 90% of our business used to come from the US. It has now reached 80% as Europe and Australia are also growing. In the next 12-18 months, the ratio should be 70% from the US and rest from Australia and Europe, he aded.

The capital market has become a big chunk for Genpact in the financial services space, which was earlier not very strong. It is the second biggest after commercial lending and leasing, followed by retail banking and mortgages, said Thukral.

The company is investing tremendously in the European and Australian markets. Thukral mentioned that though Europe is an area of slow growth, but now it is recovering. Unlike the US, there is no rhetoric of the job issue in Europe. We are investing a lot in the sales and marketing officials in this area, he said.

Broadly, in the BFSI segment, major work is dependent on the onshore employees. More than 50% of Genpacts employees onshore are dedicated to BFSI work and 70% of the employees that are sent for projects to the US or UK are from BFSI vertical.

However, as customers are getting cautious because of the economic conditions, the deal sizes have gone down and become smaller. There were times we used to send 500-600 people for a project onshore. Now it has come down to 50-100 people, informed Thukral.

In recent times, the company has been aggressively increasing its sales force for this vertical. Six months ago, Genpact appointed Charles Present to head the business development for banking and financial services, while Peter Cincogrono to head business development for the insurance vertical. These business development executives bring extensive industry experience to their Genpact roles and are contributing to Genpacts strategy of expanding both its US presence and successful BFSI client base.

But the deal duration or cycle in BFSI space has increased to 12 months from six months earlier for Genpact. Thukral attributes this to the slow decision-making process among customers because of the macro-economic conditions. The pricing pressure is still very high and we have to concentrate on newer business models like analytics to succeed in this space, he concluded.