MphasiS expects BPO segment to grow 10%
SOURCE: IndiaEarning.com
DATE: May 2nd, 2008
Mohit Soapbox:
An interesting fact from this discussion was that EDS is 43% of revenues for Mphasis. I was looking at Genpact #’s and realized that GE is 49% of their revenues . For Genpact it is a different scenario now as GE still has a stake in the company but is not represented on the board and may have different incentives to work with or not work with Genpact. EDS acquired mPhasis and has to make the relationship work.
ARTICLE
Jeya Kumar, Chief Executive Officer and Susanto Banerjee, Interim CFO of MphasiS elaborating on the Q4 results said the margins slipped QoQ due to delay in product start and on onsite utilisation drop in the application buisness. MphasiS added 811 employees this quarter. They expect to see 10% growth in the BPO segment. Excerpts from CNBC-TV18’s exclusive interview with Jeya Kumar and Susanto Banerjee:
Q: What can you tell us about 2009, without giving specific number guidance? What is the outlook at MphasiS for next year? Kumar:
For 2009, I think we will continue to see the growth story continuing. Typically we don’t give out forward guidance, but from what we have right now in terms of our pipeline visibility and our growth stretched itself we are seeing a continued growth story.
Q: Your margins have slipped in the current quarter - could you take us through why that has happened and whether it is a one-off slippage or will it continue to be mildly soft in the next few quarters?
Banerjee: Essentially the quarter-on-quarter margins have slipped because the application business is the largest in the portfolio that we have in MphasiS. The application business is a churned business and there has been some project start delays and there has been some onsite utilisation drop, which impacted the margins in this particular quarter.
Q: Do you expect to recover by the next quarter and there was a bit of a scale down in terms of employees as well, can you explain what happened?
Banerjee: With regard to the employees essentially, we tightly managed our branch once we had the visibility of certain delays in the project starts. But we did grow in terms of net headcount by about 811 and YoY we did about 7,000 people additional. So we are upto 27,000 headcounts as of now. With regards to the next quarter and the year to come, we typically don’t give any forward guidance. But we hope things are going to look up a little bit in the application side, the BPO and ITO sides are looking good. So we hope this is going to be a better quarter.
Q: The expectation for analysts was that post Q3, the big revenues would start kicking in from EDS can you just out line the performance by way of order inflow from EDS and where you see that going?
Kumar: EDS is currently 43% of our total revenues and continues to grow in that fashion. So what we are looking for this year is for that number to actually grow probably into the 45% range. But our focus is greater growth in our MphasiS call channel, that’s where we actually want to boost growth. We made a lot of investments last year in the ITO sector and that’s what is really fueling our growth. In the domestic BPO, we continue to do very well; we are among the top five now and we continue to see growth in both the ITO at about 10% and BPO at the same level.
Q: Be a little bit more specific about the BPO side of the business -what kind of bill rates are you seeing and whether margins are improving in that business as well?
Kumar: On the international side, we see the margins improving. On the domestic side, it’s a comparative test for everybody in the industry. But we see the domestic portion actually growing a lot faster. There is a lot of interest in actually migrating KPO services and non-voice services and that is what actually we are driving to.
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