Icra puts high-end BPO firms on shopping list

Domestic rating agency Icra is on the lookout for five to six medium-sized outsourcing firms as it plans to step up its presence in the high-end BPO space.

The company intends to capitalise on its analytical strengths and is targetting mid-sized US investment bank customers.

P K Choudhury, managing director of Icra, said, "We plan to acquire BPO firms that offer high-end analytical services. Here, we do not expect to face much competition. Primarily, we are not looking at price-sensitive customers, but at high-cost analysis jobs that are not driven by volumes."

The Indian BPO industry, now in the fourth phase of evolution, is seeing an increasing trend towards Indian companies acquiring small- to medium-sized businesses both in the domestic and overseas market.

The rating agency is looking at buying BPO operations in the range of Rs 5 crore to Rs 7.5 crore each.

"Investment is not a constraint. More important is the ability for us to capture client base, and get good, skilled people along with the infrastructure facilities," said Choudhury.

Some time back ICICI Onesource acquired Customer Asset BPO for $19.3 million. "Many deals are taking place today "" some for as less as Rs 3 crore," said Choudhury.

"Icra's plans to increase its BPO business inorganically also stems from the economies of scale, which will help bring down costs and ensure consistent quality control."

A recent report by Icra on BPOs states that US and European companies are currently experiencing strong profitability crisis.

"With revenue growth stagnating for the last 3 years, these companies are under grave pressure to cut costs, and have thus started outsourcing their activities in a major way to countries such as India, Brazil, the Philippines and China," the report stated.

Icra hopes to capitalise on its relationship with its global technical partner "" Moody's, which holds 31 per cent stake in the domestic rating agency.

"Our brand name will give foreign companies the confidence. Today, companies are still testing the waters and are not too confident in terms of the quality," said Choudhury.

Asked whether the recent tax debate is a cause for concern, Choudhury said: "We sometimes tend to overstate the tax issues because it tends to become a good negotiating point."