Jan 142013
 
.

 

Get News About BpO From CafeBpO Online Paper

Dear Readers now getting news about BpO is very easy. As part of continuing improvement and enhanced reader experience we are happy to announce that we will be circulating a weekly online 100% FREE paper from CafeBpO. This paper will not only be from authors of CafeBpO but also from other sources from the internet like

  • New York Times
  • Economic Times
  • CNN
  • Newsweek
  • Reuters

and many other online resources.

There are many benefits for our readers of the same e.g.

  • You get a single source to gather all the news  happening in the world of BpO at a single place
  • All latest trends, news, deals would be available to you at a click of mouse
  • As this is a weekly paper even if  you have missed something you know where to go to get all the information you are looking for
  • We will be collecting  news from sources across the globe you can be assured to get diverse point of views about the business of BpO
  • It is 100%  free with no obligation to purchase anything.

The paper will be available online every week on Tuesday around 4 pm India time (+5:30 GMT). In order to not miss it you can subscribe to the same by clicking the subscribe button on the paper or you can also subscribe to CafeBpo blog to receive it as we will be inserting it in posts on regular basis.  Here is the link to the Online Paper of CafeBpO.  Below is the screen shot of the first edition of the Free Online Paper giving you news about BpO.

CafeBpo Life career and business of Bpo

Subscribe to CafeBpO Online Paper

If you have liked this article feel free to share with your friends, and colleagues on your social networks like Facebook LinkedIn , Twitter etc. If you would like to receive regular updates from CafeBpO please use the subscribe by email option on this page (We do not sell, rent or donate your email address to spammers). You can also get in touch with us using the Contact CafeBpO form in case you have any suggestions or would like to contribute to the CafeBpO blog.

 January 14, 2013  Posted by at 11:26 AM Business of BpO Tagged with: , ,  Comments Off on News about BpO-Free Online Paper from CafeBpO
Dec 112012
 

.

The Next Wave of Consolidation in BpO Business

—A few weeks ago we have talked about the sale of Firstsource to RPG group and tried to understand what may work in the favor of the deal. The next  wave of consolidation in the BpO business continues with the acquisition of Apollo Healthstreet by Sutherland Global. If we look at the history of consolidation in the BpO business this is the third wave. Let us look at some of the earlier wave in the consolidation in the BpO business. It all started when the early start-ups were struggling to grow and needed financial muscle to scale up. They prooved that the third-party model works and the big boys of business were willing to put money behind the concept now.
  1. The First wave  of consolidation in BpO was when the early entrepreneurs started selling their companies to big business this included sales of Spectramind to Wipro, Daksh to IBM, Transworks to Aditya Birla group and so on. The sellers were first generation Indian entrepreneurs who were cashing out by selling to both MNCs as well as Indian companies.
  2. The second wave of consolidation in BpO  can be considered when the MNC  companies started selling their captive centers in India to pure play third-party BpO companies, this would be deals like TCS buying eServe  from Citi, Cognizant buying the captive of UBS, HCL buying the captive of Deutsche bank etc. There were two reasons for these sales a) the MNC parents were in bad shape financially ( citi, UBS) and wanted to cash out as many assets as possible to invest in core business. The other reason with more long-term strategic impact is the realization that the cost advantage you get by outsourcing gets blunt due to higher cost of operating the captive center. In this phase the buyers were both Indian and US companies but seller was in almost all cases a large captive of a MNC.
  3. What we are seeing now is the third major phase of consolidation. In this case the large diversified Indian companies are getting out of non core business. The sale of Firstsource by ICICI and Apollo Healthstreet by Apollo Hospitals group is in our opinion first of such deals and we expect many more are in the pipeline. What appears is that either due to regulatory reasons like in case of ICICI or due to financial and strategic reasons like in case of Apollo, a lot of deals are being negotiated behind the curtains and we will keep on hearing about them in the media as and when some thing closes.

Coming back to the Apollo and Sutherland deal given below are the details taken from media reports

 

The enterprise value of the deal is around Rs 1,000 crore, of which around Rs 210-220 crore will come to Apollo Hospitals Enterprises Ltd (AHEL), which is holding around 39.4%, while Promoters and promoters family are holding around 35-40%and One Equity Partners holding around 10-15%, said Apollo Hospitals sources.

The other major investors are PE funds including Temasek Holdings, One Equity Partners and Schroder Cap, which are holding the rest of the shareholding

The AHEL official said that the proceedings will be used for company’s Rs 2,000-crore expansion plan. At present the company has a cash balance of around Rs 300 crore.
“This acquisition will position the combined organisation as a leading Healthcare service provider with comprehensive information technology and business process integrated solutions and consolidate its presence as a dominant player in the $38 billion US Healthcare BPO market,” according to Sutherland’s statement.

Apollo Health Street provides customized strategic support services to more than 150 healthcare partners throughout the US from 10 global operational centers of excellence.

Prathap C Reddy, Founder Chairman of Apollo Hospitals, one of Asia’s Premier Healthcare Groups said, “In order to drive Apollo Health Street’s growth to the next stage, it was essential to find the right Strategic partner.

“In Sutherland, we found the ideal partner with a proven track-record of excellence in services, technology, and leadership. The combined capabilities of both companies will create a compelling value proposition for our clients,” said the Hospital Chain’s founder.

It is clear that the Apollo group will be using some of this money to reinvest in the hospitals business while some members of the family and PE companies have multiplied their investment.

As always there will be some job loss in the acquired company in the coming months, though both the companies will deny that in the media. Expect more such deals in the coming  months.

 

 Please use Contact CafeBpo form to get in touch with us if you would like to contribute content for CafeBpO

If you have liked this article feel free to share with your friends, and colleagues on your social networks like Facebook LinkedIn , Twitter etc. If you would like to receive regular updates from CafeBpO please use the subscribe by email option on this page (We do not sell, rent or donate your email address to spammers)

.

 December 11, 2012  Posted by at 11:39 AM Business of BpO Tagged with: , , ,  Comments Off on Consolidation in BpO- Sutherland Acquires Apollo Hospital’s BpO Business
Nov 162012
 

CESC Buys Firstsource-A Contrarian view

Those of you who have been following the stock market in general and BpO business in particular would have noticed the headlines that RPG group company CESC buys Firstsource (Controlled and managed by Sanjiv Goenka). As of now CESC  has agreed to buy 49% of Firstsource Limited and also make an open offer for another 25%. This will bring down stake of ICICI which has been trying to find a buyer for some time due to RBI guidelines.The stock markets have not looked at the deal in a benign way and CESC stock went down by 15% and Firstsource also not responding in a positive way. So most people think it is a lose- lose situation for both the companies.We would like to be contrarian here and actually think that this deal may work out in the next 2-3 years.

Disclaimer: We do not own stocks in any of the mentioned company as of today and this post is not a recommendation to buy or sell the stock.

In our post about the Winners and Laggards of the BPO business we mentioned that we will analyze Firstsource once the results are out and now is the right time to look at their numbers.

Headcount wise Firstsource has 32365 employees of which 10188 are outside of India, the data disclosed does not mentions the breakup of countries where these 10K employees are. These 32365 employees add an annual revenue of around 500 million USD, making it second largest BPO company out of India after Genpact, both employee strength wise and annual revenue wise.  The per employee revenue comes out to be USD 8.38, slightly better than WNS. But the difference is that Firstsource still has 10K employees outside of India and if it can change that mix even by 10% its profitability should change. Though it has an uphill task to increase the revenue per employee, but let us not forget it h as a lot of domestic business also where the realization is less but so are the salaries of employees.

The other difference will come in form of stable parent, it has been in news for 2 years now that ICICI is planning to sell its stake in Firstsource due to RBI guidelines and this has led to slow but steady ouster of top management in last few years, right from Ananda Mukerji, to other senior people.  Every time a senior person leaves it leads to continuity issues and loss of focus in the junior employees. Now with a stable parent in form of Sanjiv Goenka controlled CESC, the employees as well as customers should take a sigh of relief and get back to the business.

Impact on Employees: We agree there is no synergy between CESC and Firstsource but let us not forget CESC will not manage Firstsource but remain a holding company taking financial decisions while the day-to-day management will be with Firstsource management current or future that remains to be seen. The management  definitely will have to get used to work with an Indian business house and cost cutting will be in focus ( share holders should be happy about it and the employees respect the same if they want to prosper in long run).

Long term positives: So we will stick our neck out and say that in next 2-3 years this deal will work out well for both Firstsource and CESC till then it will be a lot of focus on cost and revenue and employee mix from different geographies and increasing the $ revenue realized per employee. The  bench mark set by Genpact is pretty high and all the other BPO companies have a tough climb ahead.

Note: We have not contacted any of the companies mentioned in the post and data is taken from Firstsource website.

.

 November 16, 2012  Posted by at 11:25 AM Business of BpO, Case Study Tagged with:  Comments Off on CESC Buys Firstsource-Why the deal may work out