WNS, an NYSE-listed business process outsourcing (BPO) company, recorded good second quarter numbers, reflecting the improving market conditions in global markets. Neeraj Bhargava, Group CEO, attributed the performance to better volume growth and a robust pipeline. In a chat with Shivani Shinde, he spoke about the recent stake sale talks with Warburg Pincus, appointing a new CEO and other issues. Excerpts:
Could you give us an update on the stake sale talks by Warburg Pincus?
As you are aware, the board decided to go against the move, since it did not find value in the change of control. It also decided to focus on growing the business and strengthening it. Before announcing the results, I was with the board and we did not even discuss this matter at all.
What is the update on the CEO appointment?
The process of finding the right person to head the company was delayed due to the stake sale issue. We are now back to focusing on finding a CEO and will soon conclude the process.
This quarter, numbers have been positive. Will this trend continue?
What has worked this quarter is that the revenue contribution has been strong from new clients. We were facing some volume pressure, but that is under control. Operating margins have been in the range of 19-22 per cent for the past four quarters. In terms of the overall market, the positive aspect is that volumes are stabilising.
Our sense is that the financial sector is clearly beginning to change. Our pipeline is much better. Our current opportunities are much more global in nature and much more complex. In geographies like the UK and Europe, growth has been traditionally slower than in the US. But since September, Europe has seen some deal flow, too.
How is the pricing environment?
It is much more stabilised. We did have some contract renewal but at a reasonable good rate. Average pricing has been stable to flat or modestly higher. We had six expansions from the existing clients and had six renewals. In addition, we closed five new deals this quarter.
What about travel, hospitality and insurance segments?
The travel and hospitality segment volumes were under pressure. We continue to be cautious about this, as clients are cautious about forecast, but we have seen a modest level of new client booking. However, since the next quarter is slow, we expect this segment to be soft. We were able to close a deal with a major hotel, which is a significant one. In the insurance sector, too, we are seeing some stability and some uptick.
