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Adith Charlie

Mumbai, Aug. 30 Mr Ananda Mukerji is the CEO of the country`s fourth largest back office firm, the ICICI Bank-promoted Firstsource Solutions. In an exclusive interaction with Business Line, he talks about the current demand environment for process outsourcing companies across various industry verticals such as financial services, telecom and healthcare. Excerpts.

Analysts say that we are seeing revival in demand as the economic environment is showing signs of improvement. Would you agree with that?

Unlike the IT industry, our current stock of business in BPO does not heavily hinge on getting new work. The work that we do is a continuous process. Due to the recession it is the volumes that get impacted. So, if we were processing 1.2 lakh transactions a month, it could go up to 1.5 lakh or down to 1 lakh depending on the economic situation.

In terms of volumes we were seeing a downward trend throughout last year. Now there is more stability; in most cases the dip in volumes has been arrested while in sectors such as healthcare volumes are picking up. Moreover, many client companies have kick-started the process of consolidating vendors to improve efficiency and to get better pricing. We are benefiting from those kinds of things.

Since you are a significant player in the banking, financial services and insurance space, could you talk about some of the trends that you see in terms of volumes?

For the mortgage related work that we do on the retail banking side, volumes are steady. The top banks in the US are not through with their problems yet; good results have been announced by banks that have made trading profit and are not because they managed to sell more loans or mortgages. Thus, the transactional volumes have not really changed in that environment. In our credit card collections business, there has been a lot of pressure since people`s ability to pay back debt came down significantly. Since liquidation rates also came down, our actual collections have decreased. Over the last few quarters, things have stabilised on this front and we are now seeing improvement from an operational standpoint. We are also being selective about the kind of collection work we take up; there is a lot of collection business available in the market today but not all of it can be profitable.

As a company, how do you plan to counter the anti-outsourcing rhetoric in the US?

In the current economic scenario, the reluctance in being seen as somebody who is moving jobs to another geography is understandable. To be a viable company we have always believed in delivering where the customer wants. We currently have close to 4,000 employees in the US, all of whom are local employees. For a credit card company in the US, we are delivering services both in the US and the Philippines. So the ability to have a blended offshore-onshore model is very important in the current environment. Moreover, in many businesses, not all processes can be moved offshore. The issue here could be related to regulations, logistics or availability of certain skill sets.

By only focusing on three major verticals of banking, financial services, insurance (BFSI), telecom and healthcare do you not think you are missing out on potential opportunities in verticals such as transportation, travel and tourism and retail?

We have to strike a balance between missing out on opportunities and building domain expertise and specialisation in existing businesses. Yes, we are potentially missing out on some verticals or horizontals. However, I believe that there are lot of opportunities to pursue in our existing verticals. Once the current turmoil comes to an end, the banking industry will see another phase of high growth. Healthcare and telecom are sectors where the opportunities are still huge. I feel that the verticals chosen by us are those which are capable of driving high growth. Since vendor consolidation is happening our ability to enter into a new vertical has become restricted. In the domestic market, there are opportunities which interest us in the government and financial services space.

How is your 2007 acquisition of the MedAssist Holdings panning out for the company?

We are adding more customers in the healthcare space. When we acquired MedAssist it was doing mid-single digit growth. Our aim is to accelerate that to the 12-15 per cent growth.

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