Essar Group-owned business process outsourcing (BPO) company Aegis is planning to put to rest its acquisition strategy for some time, and focus more on growing organically. Aparup Sengupta, CEO & MD of the Mumbai-headquartered company, says they want to do more works onshore and open new centres in European countries.
In an interview with Piyali Mandal and Bibhu Ranjan Mishra, he discusses how the BPO industry is prepared to take on the microeconomic challenges. Edited excerpts:
Aegis is known for its aggressive acquisition strategy among major Indian players. That pace seems to have slowed. Why?
We were following a double- cylinder strategy. One of them is not on fire right now, which is to buy. When we were growing, we had to make our presence felt in the world. We had a choice between build by ourselves and buy. We preferred to buy because it gives time-to-market advantage. Now that we have already achieved the scale, this year we want to prove that Aegis can grow 50 per cent even organically. If we grow from $700 million to $1 billion in revenues, I don’t think I will have to tell it to the world that Aegis only grows inorganically.
Do you aim to cross $1 billion in revenues in the current financial year?
Yes.
Is this kind of growth achievable through inorganic route?
Yes. But we have that war chest. If we want to exercise, we can fire it up in the next three months. We will hold on to it because the return-on-capital employed is much higher in organic path. Also, one can recover the investment faster compared to the inorganic route.
Do you think the current economic uncertainties in the US and UK would dent your growth plans?
No. In fact it is the reverse. If there is a huge downturn, BPO firms create more jobs. There is a negative correlation. There is a difference between the business models of BPO and information technology (IT) companies. The IT industry is highly prone to discretionary spends and trends. That means, clients can spend those at their discretion and even manage without that spending. BPOs primarily rely on non-discretionary spends and this is the primary reason why the industry has grown to this level. For every incremental work you do in a BPO, there is a natural savings that happens and that starts reflecting from the day one.
Which are the geographies you plan to grow organically?
In July, we had announced our foray into the UK and European market by opening a new office in Manchester. The centre will go live in November with 600 people. It has a potential to expand further. We will also look at other cities in Europe such as France, Germany, Italy and the Nordic block. We are also planning to expand in the US.
Does that mean you are planning to expand your onshore capabilities?
Yes. The whole offshore thesis in BPO will taper off and become onshore. At present, we do 60 per cent of our works onshore. That is going to become 70 per cent in coming days.
How about China?
We don’t have a presence in China. We may look at it later.
You recently acquired the back office of Saudi Telecom. How is that business shaping up?
As a part of our deal with Saudi Telecom, the two companies had signed a near equal joint venture coined as Contact Centre Company (CCC). The consolidation is going on. About 500 people from Saudi Telecom have transitioned to CCC and another 4,000 will move in the next 18 months. We are planning to use the centre to serve other clients in West Asia.
