WNS sees strong recovery in BPO industry

BANGALORE, INDIA: Back-office firm WNS Holdings Ltd sees a strong recovery in the business process outsourcing (BPO) industry over the next 12 to 18 months and plans to boost hiring to tap this growth, according to its chief executive.

While the IT sector is seeing some solid recovery, the BPO sector is still suffering from an overhang of long-term sales cycles, but that is on track to change, chief executive Keshav Murugesh said.

"We are seeing a lot more enquiries and travel taking place between clients - which are all positive signs," Murugesh, who took the helm in February, told Reuters in an interview.

"As people believe that the market is beginning to come back for their businesses, they are also starting to look at new cost-saving measures, new efficiency measures."

The CEO's comments come at a time when Indian IT companies are fretting over the Obama administration's "protectionist" measures aimed at keeping jobs within the United States.

The move could hurt the Indian outsourcing sector, which generates about 70 percent of its revenue from the United States and accounts for about 5 percent of India's total economic output.

However, Murugesh said while companies will have to take into account these new policies when they frame their business models, "at the end of the day, the reality is that CEOs will have to make decisions based on the right impact on stakeholders."

Hiring more

Murugesh said WNS did not face any cancellations by its clients and that the company would meet its 2010 outlook. He also expects hiring rates in 2011 to be higher than this year.

"We may not be in a position to make many (contract-related) announcements, but...the pipeline is looking good, the discussions are looking good and client visits are looking good," Murugesh said.

Indian outsourcers have thrived by providing Western firms with services such as processing insurance claims, managing payrolls and customer support.

The economic crisis in the United States, the largest market for Indian outsourcing firms, had crimped the pace of growth of Indian outsourcers last year.

WNS, whose rivals include Genpact, Firstsource Solutions and ExlService, is also looking to grow its presence in the Americas -- a market that currently accounts for about 30 percent of its revenue.

"That's the market that has traditionally been the outsourcing zone -- people there really get it. Nobody needs to sell India as a destination there any more," the CEO said.

Murugesh said the company aims to increase Americas' revenue contribution to more than 40 percent.

WNS currently gets about 60 percent of its revenue from Europe. Its top customers in fiscal 2009 included Aviva, Biomet Inc, British Airways and Centrica.

The company, which employs about 22,000 people, also competes with BPO divisions of technology services companies such as Tata Consultancy, Infosys and Wipro.

Mumbai-based WNS is looking to tap countries in the MiddleEast, pockets of Japan, Australia and some Baltic nations as it looks to grow its global footprint.

Murugesh said WNS would carve out its banking and financial services segment into a separate vertical and bring in new leadership.

"Banking and financial services have been through deep stress and their need to save costs and bring in more efficient models has actually heightened dramatically," the CEO said.