Hinduja Global Solutions looks at acquisitions in Latin America

Back-office service provider Hinduja Global Solutions (HGS) is looking at acquisitions in Latin America to build digital capabilities and expand on-shore delivery in the region.

The Rs 2,770 crore business process management solution provider currently has more than 4,000 employees servicing its customers in the US through 9 delivery centres. The company has a surplus cash on the books worth nearly Rs 440 crore as on December 31, 2016.

“We are now looking at Latin America for inorganic growth. There is cash on the balance sheet. Our current focus is on inorganic growth and we acquired firms in Philippines, Canada to build new capabilities,” said Partha DeSarkar, chief executive officer, HGS.

DeSarkar added that while the company has made acquisitions in the recent past expand presence in new markets, it would now focus on building capabilities in the areas of Artificial Intelligence, Digital, Analytics.

In March 2015, the company’s acquired Atlanta-based company Colibrium to strengthen its capability in delivering services to business-to-consumer segment.

The company reported a 14 per cent growth in revenue in Q3 of this fiscal and its operating margin (EBIDTA) stood at 11.5 per cent.

HGS acquired the BPO operations of Mphasis in September 2015 to increase its footprint in North and South India in cities such as Raipur, Noida, Mangalore, Bangalore and Pune.  

DeSarkar says even the IT services industry lobby Nasscom has delayed its growth forecast and sounded caution, his company and the BPM industry has not pessimistic about the growth. Nasscom deferred to give growth projection for FY18 for the first time in 25 years as the industry faces uncertainty due to regulatory changes in the US and macroeconomic outlook. 

“The core drivers of IT and BPM are different. IT is project based, but we do work that are more annuity revenue based. There is lot more certainty around revenue streams as contracts are longer. We impact the operating expenses of businesses. Savings agenda never goes away whether it is hard times or good times. What we do helps the clients generate cash as opposed to spend.”

The company has increased its onshore delivery in the healthcare segment, which contributes 47 percent of its topline currently. It believes the core of the business process management business is no more driven by just labour-arbitrage but value arbitrage. “So long the business is value-arbitrage based the industry would continue to grow, despite challenging environment,” said DeSarkar.