Infosys BPO is stable despite senior exits

 The business process outsourcing (BPO) arm of software service exporter Infosys has been a curious case with greater appetite for acquisitions than its parent, which often gets blamed for being too conservative.

Infosys BPO has done at least three acquisitions in as many years. With a merger and acquisitions team of its own, inorganic strategy will be key to doubling its revenues to a billion dollars, CEO and Managing Director D Swaminathan told ET. In an interview with ET, he dispels concerns around recent spate of senior level exits. Excerpts: 
You have said in the past that inorganic strategy to play a significant part in taking current revenues of $500 million to $1 billion. How is that shaping up?
We just closed a transaction, an insurance BPO business in the US. This is expected to add about $10-12 million to our revenues annually. We have also taken around 87 employees as part of this deal. We will be adding another 25 employees in next 60-90 days. Along with this acquisition, we get seven clients handling over 600,000 life insurance policies. After this acquisition, McCamish will perhaps be one of the few companies with end-to-end service offering in the life insurance space. 

The COO post is still vacant, after Ritesh Idnani's exit a few months ago?
We have strong succession planning in place. When we promise our clients that no matter what happens we will offer business continuity, we have to make sure that we have leadership pipeline, at all levels. We have filled up vacancies through internal deployment. And we have done that within 48 hours. We have not designated a COO as such but leaders in the company have taken up the responsibility internally. Whenever time is appropriate, we may still consider getting a COO on board. 

Attrition at senior level, including a couple of country heads recently, is not worrying?
Like I said in past, I do not see a trend in this. A few exits got bunched up coincidentally. People have their personal and career choices. As of now the (management) structure is stable. 

Compared to Infosys, the BPO arm has done much better. Is the market looking better for you?
We are in a different league. We are $500 million firm versus $7 billion Infosys. The opportunity for us is immense. For a client working with a BPO is not about the budgets, rather we help them release budgets for other projects. Anything they invest today is direct addition to their bottom line. By working with BPO, they release cash, improve profitability; so we are more relevant when times are bad. For us growth is not a constraint. The real challenge is availability of skilled manpower. 

Are you able to do better because you are part of a larger IT service group and not a pure-play BPO?
BPOs have started building solutions beyond labour arbitrage. It is business process management now. So as we move forward, we would see more examples of shared services, integrated play. People are very clearly looking at comprehensive solution. As we start moving up the value chain, it is will continue to be important for service providers to have an integrated play rather than pure play. One of the reasons why companies like us have an edge because we bring is capability from our parent company as well. 

What will guide your inorganic strategy going forward?We have a separate M&A team that continuously looks out for opportunities that enhance our capabilities and reach. In 2007, we acquired Philips BPO that gave us opportunity in finance and accounting. In 2009, we acquired McCamish that gave us capability insurance, and last year we acquired Portland, which gave us strategic sourcing and procurement capabilities. Philips BPO took us to Eastern Europe and Poland as well as Bangkok. McCamish gave us entry to the US market and Portland gave us entry into Australia.