Thursday, 6 August 2009

Mixed outlook from India-based BPOs

(By Anthony Miller – Thursday 6th August 2009 12:00pm). A couple of the India-based ‘pure-play’ BPOs recently reported quarterly results with a somewhat different tone on their outlook.

Genpact, which still gets 40% of its revenues from ex-parent GE, made a fairly substantial cut to its 2009 revenue guidance, from 10-15% to 6-9%, which would put them somewhere north of $1.1b for the year. They did, however, tweak up the ‘adjusted’ target operating margin from 16-17% to 17-17.5%. The demand fall-off wasn’t just a GE problem – it was pretty much across the board. IT services (mainly discretionary) was hit again, and now comprises just 17% of Genpact’s revenues, down from 21% a year ago. On the concall, CEO Pramod Bhasin sort of called the bottom, saying that he believed the environment is not getting worse but not yet getting much better. However, he also reported that deals are smaller and decision making slower, with customers still focusing on absolute cost reduction while eschewing projects with significant upfront cost. By the way, everyone else is saying that too.

Ex-BA captive, WNS, on the other hand, stuck to its guns and did not reduce FY guidance so still aims to reach $385-390m by year-end (31st March ’10). Because of its heritage, WNS gets an unusually high proportion of revenues from the UK, now around 58%, so the strengthening pound helps (WNS reports in USD). Last year’s billion-dollar Aviva deal also helps (see WNS wins mega 8 year $1b BPO contract with Aviva). Indeed, WNS is now on a trailing 12-month UK run-rate of some £150m which may well push it up the UK SITS rankings (it was 49th on its 2008 numbers).

More on these and other offshore players in the next edition of OffshoreViews later this month.

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