We are looking at expanding our base in the US

Written by Rachana Khanzode | Updated: Nov 2 2010, 04:41am hrs
WNS Holdings reported net income of $13.8 million in Q2 against last quarter at $2.2 million. WNS Holdings CEO Keshav Murugesh tells Rachana Khanzode that the firm is focusing on verticalisation and was looking at growing through a non-linear model. He adds that the firm was not witnessing any pricing pressure at the moment.

What were the major changes in WNS over the last six months

Firstly, we have shifted focus by creating verticalisation from the earlier horizontal way of approach to the clients. So now we have BFSI, travel, healthcare, utilities, manufacturing and shipping and logistics. Our largest insurance client Aviva is now a part of our insurance vertical. This is going to help us bring focused domain offerings to our clients. Next we have built in new client facing and sales team and new vertical heads. We are also focusing on increasing our geographic presence. At the same time we are also looking at non-linear model to grow our revenues.

What about geographic expansion and non-linear model

We are looking at non-linear models where we want to increase our revenue per employee rate. Our headcount growth has almost been flat at 21,460 with an attrition rate of 42%. We are looking at expanding into China, far East and strengthen our eastern Europe operations. This will be through partnerships and organic growth. Also, we are looking at expanding our base in the US by about 500-1,000 people in partnerships with clients. We expect things to materialise over the next two quarters.

What led to a major surge in net income

The sequential increase was due to lower interest expense, change in pricing from a large insurance client and cost cutting and LEAN initiatives. Revenues less repair payments declined 6.6% to $93 million, on yearly basis as a result of change in pricing with a travel client, weaker British Pound and lower volumes in travel and insurance verticals. However, it was up 4.3% sequentially, as these were offset by price improvement with a large insurance client and ramp ups with other existing clients.

How does the environment for the BPO sector look like

The IT firms have seen a faster turn around. For BPOs its a different strategy and, in long term, we continue to see it growing healthy. The economic conditions are stressed now and, therefore, clients need to spend more on outsourcing. For WNS we see some of our insurance clients being cautious but the over all BFSI sector is looking at higher cost efficiencies. Our share of revenue from Aviva has also grown now. But, travel is a area where we are seeing delays in decision cycles due to more of merger & acquisitions.

Do we see any pricing pressure

This is a one off negotiation we have seen for a bigger contract with an existing client. We have renewed contracts with our top 10 clients and we have got a decent pricing. We are not seeing any pricing pressures at the moment.