WNS Q4 2010 – earnings, learnings & metrics
FACTS
- Europe remains unstable and currency risks for Europe continue to be a factor for decline in WNS revenues. High dependency on Europe for auto claims business and the currency risk with Pound has high impact on WNS earnings.
- WNS changing their go to market model and hiring selective but new talent to help them manage client relationships and get into newer accounts.
- Weakness in travel business and insurance business – two of the key verticals for WNS.
METRICS
- Revenues ( less repair)– $157.6 million ($96.7 million) QoQ – (Flat) , YoY – (1.8%)
- Net Income – $13.3 million QoQ – (19.8%), YoY – (-2.6%)
- Attrition – 43% ( Last year same quarter – 21%, Last quarter – 31%)
- Full Year Attrition – 32%
- Headcount – 21,958 (1,250 FTE count in Philippines)
- Net Addition – 566
- Full year Revenue (less repair) - $582.5 million ($390.5 million) ( YoY +1.4%)
- Full year Net Income – $50.7 million ( YoY +8.6%)
LEARNINGS
- Currency risks in existing contracts are primarily borne by the vendor. E.g. in the Aviva contract with WNS, there are no currency risks and given the volatility of the currency, customers like Aviva are reluctant to add any currency risks as part of the contract.
- Mid size firms like WNS continue to struggle with distinguishing themselves in a crowded marketplace and commoditized service offerings. Being vertically focused helps to win business but also has the challenge when those verticals are down e.g. Travel, Insurance for WNS.
- Firms like WNS have to also look beyond BPO offerings to grow their organizations and partnership model might be one of the potential scenarios which works for WNS.
- Outsourcing in BPO is a buyers market and companies looking to offshore should leverage this opportunity to be selective about the vendor or partner they would like to work with.
- Mid size firms will continue to struggle for next few quarters as they fight hard to position themselves in the changing marketplace.
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