TCS BPO, accounting for 11 per cent of the revenue of India’s largest information technology services company, Tata Consultancy Services, is eyeing deals in the healthcare, BFSI (banking, financial services and insurance), retail, telecom and media & entertainment sectors in the range of $10-50 million (around Rs 49-245 crore).
Abid Ali Neemuchwala, its vice-president and global head of BPO Services, said these deals, along with its end-to-end BPO services offering, will help it attain a compounded annual growth rate of 45-50 per cent, to touch its target of $3 billion in the next five years. The BPO unit had a revenue of $415 million (around Rs 2,033 crore) last year.
With close to 26,000 employees in the BPO unit, Neemuchwala is also looking at expanding some of its centres. TCS will be adding around 1,000-1,200 people in the next 12 months.
“Unlike the IT business, in BPO you need to be closer to the customer. One is because of the processes, and also due to regulatory issues,” he added.
Currently, it has 1,000-1,200 people in Europe, 2,500 in Latin America and 250-300 in China. The confidence to reach the target comes from the broad services offering that TCS BPO has, as well as the opportunity it sees.
“We already have a customer base of over 300 on the IT side that can be offered BPO services, including the existing 100 clients. For instance, in the vertical segmentation, there is enough headroom among the BFSI for us to grow. Besides, the CGSL (Citigroup Global Services Ltd) acquisition allows us to offer services that none of the third players have,” said Neemuchwala. Within a year of this acquisition, TCS had signed six clients.
“We are also seeing that clients are going in for bundled deals, that take care of both IT and BPO. Rather, 30 per cent of the deals that we are in talks for have a bundled component. We are close to signing a deal in the pharma sector,” he added. Another reason for this, he agrees, could be the need for vendor consolidation.
When asked if TCS has been a bit late in getting its BPO offering in place, Neemuchwala agrees.
“Yes, we did take a bit longer than expected, but what we have is a transaction-based model. Besides, it is not that we didn’t offer BPO services. It was just that we were focusing on building our capabilities,” he said. Almost 80 per cent of its revenue comes from transaction-based processes.
Because it did not want to be in the voice-based, call-centric work, TCS sold its stake in Intelenet — private equity player Blackstone acquired the BPO recently in a first management buyout in India — in 2004. Post that, the company was focused on growing its business organically.
Neemuchwala explains that the company, while did acquisitions, was primarily focused on organic growth. On the inorganic route, TCS bought Comicrom in 2005, giving it presence in Latin America.
From 800 people, the operations have scaled up to 2,500. In 2005-06, the company set up Diligenta, the result of winning a $862 million contract from the Pearl Group.
This gave the firm an entry and opportunity to tap into the huge insurance market, as well an entry in European nations like Hungary. The $1.2 billion, 10-year outsourcing deal with Nielsen, signed in 2007, was also a way of growing the business.
