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Hinduja Global Solutions (HGS), a provider of business process outsourcing (BPO) services, has decided to freeze hiring of people.
This is part of cost containment, after its first quarter profit almost halved to Rs 16.2 crore from the same period a year before.
“Containment measures include a freeze on hiring both at fresher and senior levels, and travel restrictions,” said Partha De Sarkar, chief executive officer, after the results announcement on Thursday.
Capping and deferring salary rises are some of the measures, he added. Bengaluru-based HGS is part of the diversified Hinduja Group and employs around 28,000 across the globe, the majority in India. No dismissals so far, the company said.
Net profit was only 2.2 per cent of the net sales of Rs 739 crore in the June quarter, primarily due to problems in Canada, its second largest market after America.
Revenue growth was 10.9 per cent over a year before and the operating margin slowed to 7.3 per cent from 11.5 per cent a year earlier, due to lower than anticipated volumes in some regions and a higher cost of operation. The latter rose as some provinces in Canada raised the minimum pay and there was also a withdrawal of tax benefits. Also, a stronger Canadian dollar against the rupee in the quarter.
“Due to the headwinds we received in Canada, its share of revenue declined from 22 per cent to 15 per cent in this quarter. Seasonal slowdown also impacted the numbers,” said Sarkar.
HGS derives 85 per cent of revenue by offering business process solutions to health care insurance providers and telecommunication companies. In 2014-15, revenue was $458 million (nearly Rs 2,300 crore).
The company also said its first quarter results were not comparable since it acquired a majority stake in US-based Colibrium in March.
Sarkar said the company’s proposal to acquire part of Mphasis' BPO operations for Rs 17 crore had got regulatory approval and the deal was expected to close next month.
