Buying IT companies in US and setting up overseas centers a new wave for Indian BPO companies! Wise move?
Sunita Dubey, Special Correspondent
September 13, 2004 

Indian BPO companies are buying IT and Call center companies in US. These companies are privately owned with unknown financials. Indian BPO companies are also rushing to set up centers outside India to avoid coming backlash on India. 

IT industry in US in recent years has suffered heavily. Lack of demand and clients direct relationship with international players like TCS, Wipro has caused major problems.

Not all acquisitions may be bad. ICICI BPO providing arm OneSource Ltd. Claims it acquired a good one in US.

BPO service provider ICICI OneSource Ltd recently announced that it has acquired a 51 per cent stake in Pipal Research an Illinois USA incorporated company. Pipal Research specializes in providing high-end customised business research, analytics and information services, according to an ICICI release here. No financial details of the deal were disclosed. "The acquisition gives both companies significant synergies in business development. It adds new capabilities to ICICI OneSource's business process solutions bouquet and helps Pipal Research pursue an aggressive growth in a strategic market segment," the release said. Manoj Jain, CEO, Pipal Research, said: "Through the acquisition, we will leverage ICICI OneSource's financial strength and brand equity to build on our success to generate further high growth levels and to expand our service offering." 

Only time will say if this was a good acquisition.

Business process outsourcing (BPO) firm, ICICI  OneSource Limited is looking to foray out of India and is planning to open centres in countries like Mauritius and Philippines during the year.

Speaking with eFE, ICICI OneSource Ltd managing director and CEO, Ananda Mukerji, said, "We are exploring possibilities of setting up our centres overseas in near shore locations such as Mauritius, Philippines, etc. This is a move purely based on customers' perspective, to enable us to serve clients from multi-locations."

The company is also planning to set up an additional centre in Mumbai during the current fiscal year. In terms of employee addition, ICICI OneSource added 2,000 employees to its staff during the current fiscal and will add another 1,000 people by March 2004. "We began the year
with a strength of 2,000. By March 2004, we will be 5,000 strong across five centres in India," Mr Mukerji said. The firm currently has three centres in Bangalore and one in Mumbai.

On the kind of operations being outsourced to India, Mr Mukerji said that the BPO industry here would see more analytical research as well as higher end transaction  processing works being outsourced. The deals offered to firms here were getting bigger in size and complexity, he said.

The recent acquisition of Bangalore-based BPO firm First Ring has helped in increasing the market reach of the company, he said, adding, "First Ring had very strong customers in US, while our strong base was in UK. The acquisition has added capabilities and added to our outbound strengths."

Attrition rates in the firm, currently between 25 per cent and 30 per cent were expected to come down to 20-25 per cent, Mr Mukerji said.

"ITES (IT-enabled services) industry would always have a certain percentage of attrition. Currently, there are too many players coming in and going out. But as the industry matures, the rates would come down significantly," he added.

The company serves verticals such as financial services,  retail and utilities such as telecom and has 21 customers, including 14 large clients.