Software and KPO are complementary ballgames

What have been the key differentials on HR, billings and operations for Synechron's KPO arm?

KPO business needs substantial investments at the inception stage and the recovery period is long. We definitely have the advantage of cost differentials and quantity of manpower in India but infrastructure is a concern area on operational front. Margins are definitely lower if we take into account the upward move on salaries and longer recurring costs.

In comparison to the industry rate of 25-35 per cent we have maintained an attrition level of two per cent. In recruitment, almost 95 per cent of our pool is the experienced lot on niche areas of financial processing and compliance to US laws. It's a very significant knowledge curve here and when we started we had to invest substantially on inculcating the requisite training and process expertise.

Now we are equipped to handle the entire radius from processing to loan disbursement and even underwriting. Software is a completely different ball game and is linked to innovation for which clients are ready to pay. In KPO, cost advantage and repetitive nature of tasks are differentiating factors. But in our case, both the divisions have complemented each other well.

In mortgage division, we have benefited from a significant overlap between both the functions. KPO manpower contributes with hands-on knowledge that is useful for software team.

Would Synechron foray in other business areas after KPO?

We are satisfied with the margins in BFSI and have been doing well in media, technology and retail space. The company might however explore databases, open source, telecom and embedded technology as new areas.

How apt can be BOTO to your SDC model of business?

SDC (Strategic Development Centre) has been very successful at Synechron as we have replicated entire operations and processes for clients at our India facility. Every SDC is a mirror image of the client's centre and the client has similar control over it as abroad. The only difference, of course, is the costs involved. Till date, we haven't explored BOT (Built Operate Transfer) model, as unless it's large deal, the client would not prefer an additional burden. They just need the right people at the right time.

Do you agree that India is gradually diluting its cost arbitrage over others with the spiraling rise in salaries here?

With cost rising, competitive advantage does face some impact. There is significant competition from China especially on the fronts of engineering output and infrastructure. Technologically, India has abundance of talent in terms of the global scenario and benchmarks. At the same time, soft skills like client interface and communication are essential criteria.

Any plans of exploring India as a KPO market too?

Right now, our business is coming from UK, Europe, Hong Kong and US that accounts for 98 per cent of the total pie. The domestic market is still picking up but it is less than 10 per cent here. As of now we have enough on our plate and won't consider any moves at least in the KPO segment. Once we have more bandwidth we might consider banking and finance verticals in the IT business for India.

When is your Hinjewadi campus going on stream?

It will be operational three years from now and we have already been allotted land by MIDC. But as of now, we would be temporarily looking for a plug-and-play facility here before moving to a new campus.

Are you looking beyond Pune in the long term?

Yes, in the course of time we would consider Bangalore and New Delhi for expansion.

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