TCS in big BPO ramp-up, plans include buyouts
Tata Consultancy Services (TCS) is looking at acquiring business process outsourcing (BPO) capabilities in healthcare, BFSI and human resources space.
Tata Consultancy Services (TCS) is looking at acquiring business process outsourcing (BPO) capabilities in healthcare, BFSI and human resources space, N Chandrashekaran, chief operating officer and CEO-designate, said on Saturday.
The company, which posted stellar first-quarter performance, is also aiming to generate $3 billion (roughly Rs 15,000 crore) annual earnings from the BPO business within the next five years.
That’s more than 650% growth from the Rs 1,919 crore revenues generated by the business in the last financial year.
India’s biggest software company normally does not talk on revenue targets, but it is seeing greater scope for achieving a milestone of that magnitude because of cross-selling opportunities to existing customers and the overall rise in outsourcing expected.
The company had an active BPO customer base of 933 in the April-June quarter of the current fiscal.
It earned just 0.3% of total revenues from new customers in the first quarter ended June 30. 99.7% was repeat business.
The $3 billion goal, however, would depend on effective execution of services.
“The opportunity is there. If we can scale up and deliver, there is scope for that target to increase definitely. It depends on adoption of outcome and transaction-based pricing,” said Chandrasekharan.
He said pricing pressure and margins in BPO services is similar to those in IT services. The BPO business earned Rs 822 crore in the first quarter.
TCS acquired the captive BPO unit of Citigroup (now named TCS e-Serve) for Rs 2,449.48 crore in October 2008.
The company is investing on its platform-based BPO offerings (an outsourcing model where technology platforms are used to provide solutions and services) that reduces revenue dependence on proportional addition of manpower.
“About 50% of the investment on non-linear services is going into developing platform based capabilities,” said Raj Agrawal, global head of platform BPO solutions for TCS.
TCS started its platform BPO unit in April 2008 and since then “has seen good traction in human resource outsourcing platform, and has created new platforms in select areas of finance and accounting procurement and analytics”, read a disclosure in the company’s FY09 annual report.
TCS’s BPO business employs 26,000 people (4,000 abroad) and aims to add between 1,500 to 2,000 people in the current fiscal year. On the IT services front the firm has made a campus offer of 24,885 people.
The company, which posted stellar first-quarter performance, is also aiming to generate $3 billion (roughly Rs 15,000 crore) annual earnings from the BPO business within the next five years.
That’s more than 650% growth from the Rs 1,919 crore revenues generated by the business in the last financial year.
India’s biggest software company normally does not talk on revenue targets, but it is seeing greater scope for achieving a milestone of that magnitude because of cross-selling opportunities to existing customers and the overall rise in outsourcing expected.
The company had an active BPO customer base of 933 in the April-June quarter of the current fiscal.
It earned just 0.3% of total revenues from new customers in the first quarter ended June 30. 99.7% was repeat business.
The $3 billion goal, however, would depend on effective execution of services.
“The opportunity is there. If we can scale up and deliver, there is scope for that target to increase definitely. It depends on adoption of outcome and transaction-based pricing,” said Chandrasekharan.
He said pricing pressure and margins in BPO services is similar to those in IT services. The BPO business earned Rs 822 crore in the first quarter.
TCS acquired the captive BPO unit of Citigroup (now named TCS e-Serve) for Rs 2,449.48 crore in October 2008.
The company is investing on its platform-based BPO offerings (an outsourcing model where technology platforms are used to provide solutions and services) that reduces revenue dependence on proportional addition of manpower.
“About 50% of the investment on non-linear services is going into developing platform based capabilities,” said Raj Agrawal, global head of platform BPO solutions for TCS.
TCS started its platform BPO unit in April 2008 and since then “has seen good traction in human resource outsourcing platform, and has created new platforms in select areas of finance and accounting procurement and analytics”, read a disclosure in the company’s FY09 annual report.
TCS’s BPO business employs 26,000 people (4,000 abroad) and aims to add between 1,500 to 2,000 people in the current fiscal year. On the IT services front the firm has made a campus offer of 24,885 people.