 "We'll still grow 4-5% this year, despite losing the large client: Rohit Kapoor")
The termination of the contract from The Travelers Companies, its largest client has come has a big jolt for EXLService. The Nasdaq-listed BPO services company was deriving close to 10% of its overall revenues from Travelers when the client terminated the contract after it discovered breach of confidential data. In an interview with Bibhu Ranjan Mishra, EXLService's vice chairman and CEO Rohit Kapoor says the company has taken a number of steps to ensure that such occurrence does not happen in future. Edited excerpts:
It seems the loss of the client, The Travelers Companies, has hit you quite hard?
Yes.
Since the termination of the contract was due to breach of confidential client data, it also affects your credibility as a service provider. What actions have you taken to ensure that such incidents do not occur in the future?
Well, we have done a number of things. We have made increased investment in technology and tools to make sure that this kind of occurrence does not happen. We have bolstered our processes and control by hiring one of the top four auditing firms to help us create those processes. We have increased spending on training and creating awareness with our employees. But in a people-driven business, sometimes you can have these things.
What are you doing to compensate the loss of revenues from this key client?
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We derived around 10% of our overall revenues last year, from this client. We grow in double digits every year. And this transition of the client will take place over the next 18 months. Thus based on our guidance, we will still be able to grow about 4-5% despite losing this large client.
Will there be any further cost as far as this client is concerned?
We don?t know what the cost will be. We can?t say what the cost will be. We are unable to provide any estimate or any forecast on what the cost could be. If we incur a cost, we will recognise that during that period.
Even otherwise also, if you include the $2.5 million of additional costs you have incurred last quarter towards transition and disentanglement of the client, your revenues have remained flat, sequentially?
In the third and fourth quarter, our finance transformation business typically does well. But in the Q1, that seasonality is not there. That?s what we saw in Jan-March quarter when we had a slower start. Otherwise, our analytics business has registered a very strong YoY growth of 39%.
Why has been the BPO industry in general continues to lag behind the IT services peers, in terms of growth?
I think in the BPO industry always grows at a slow but steady growth rate. You won?t see a very sharp growth. For the IT industry, the growth is quite volatile. However, since IT is a lot more project-based, recovery happens much faster.
How is the BPO industry in general and EXL in particular, adapting to the changes happening in the market place, especially when lots of spending are expected in the area of ?digitisation?
We are certainly using a lot more technology in our services. We have been investing in some of the technology platforms during the last three years. We bought LifePRO which is a policy administration platform; we bought Trumbull, a subrogation services platform; Landacorp, healthcare platform. We have also have been bringing in investments in business process automation.
Going forward, what is going to be your acquisition strategy?
We have $150 million of cash in our balance-sheet and we are a zero debt company. So we will continue to be aggressive in the acquisitions front. We are looking at assets in insurance, healthcare and analytics areas which have lot of potentials for growth in the future.