Buoyed by an increase in revenues from business process management (BPM) services and acquisition of consulting firm Headstrong, the country?s largest business process outsourcing (BPO) company Genpact exited the first quarter of 2011 with a 28% rise in net income and 15% increase in revenues. In an interview with FE?s Kirtika Suneja and Diksha Dutta, the BPO?s chief operating officer (COO)
NV Tyagarajan explained that though the maturity in BPO is lesser than IT outsourcing (ITO), the opportunity is much more.
What have been the growth drivers this quarter?
Global clients have been a clear engine of growth and this strong performance was led by BPM revenues from global clients increasing 27.5%, including more than 50% growth in smart decision services, especially in re-engineering and analytics. Genpact also saw healthy demand for core offerings in finance and accounting in key growth verticals, such as consumer packaged goods, retail and pharmaceuticals.
These verticals are not the conventional growth areas for BPOs…
We don’t call them unconventional but these verticals have always been interesting for Genpact because of our deep domain capabilities in these. For instance, the pharma industry is going through a phase of consolidation with changes and patents. Otherwise, BFSI is huge and now we are looking at capital markets also after Headstrong.
You have mentioned 50% growth in the smart decisions business for this quarter. Where are we seeing this growth?
Right now, we see this coming from the developed economies such as Europe, Australia and Japan as they are changing the way they work. These economies are undergoing severe new regulations in banking, healthcare and insurance. They have complex processes to be handled which include audit as well. But gradually, we will see the traction in developing markets like South Africa, Latin America, India and China.
What opportunities do you see in domestic deals?
The Indian customers are looking at transformation deals which are a combination of new technology, shared services and business analytics. India is a very innovative market where clients are growing at the rate of 30-40%.
The Indian market is definitely growing at a faster rate, but the deal sizes are five times smaller than the global market. The opportunity lies across verticals like telecom, financial services, infrastructure, insurance and energy.
As per industry analysis, is it true that the BPO segment is growing faster than the ITO market at present?
The two markets are very different. In the IT space, the total deals, revenue as well as growth rate, is bigger than BPO. On the other hand, BPO has a longer recovery cycle and now after recession ? the growth rate is coming back.
Thus, the maturity in the BPO space is smaller, but in longer term BPO has higher opportunity than IT because of the untapped market.
There are not many announcements happening in the India-to-India (I2I) and China-to-China (C2C) businesses. What sort of growth are you seeing in these geographies?
I2I is seeing one of the highest growth rates though it is a small piece of the business.
However, the range of things we do here matches with that of the global markets. We are seeing innovative deals in I2I and customers are willing to pay. C2C, on the other hand, is not a big business and state owned enterprises in China take time in decision making. We signed a deal last year for delivering training tools and content for hiring people to a state and that can be replicated in 20 states in China.
You had plans of setting up a Brazil-to-Brazil business also…
So, we are not yet there in Brazil but in a couple of months, we will have a centre there and a business development team.
