Why Mukerji's banking on voice

As part of of a series of Q&As with Indian outsourcing players, Ananda Mukerji, CEO of FirstSource, an Indian outsourcing company with a focus on banks, explains why all call centre work is not commoditised.
Can you give us some background on the firm?
We started in 2002 as ICICI OneSource then renamed before our IPO. ICICI Bank currently accounts for only 3% of our revenues. We have 15,000 people spread at delivery centres across the world. For the year ended March 31 2007, we achieved revenues of Rs8.4 billion ($207 million).

What is your niche within the BPO space?
We have a clear focus on verticals. We have built competency and capability in the banking, financial services and insurance (BFSI) space. Last year 52% of our revenues was from clients such as Capital One, HSBC, Citi, Lloyds TSB and Wachovia. Three of the top five banks in the US and two of the top five banks in the UK are our clients. We also have competence in the telecom/media and healthcare space. Two of the top 10 telecom companies and the top two healthcare players in the US are our clients.

There is a perception that voice work is lower end. What is your comment?
Complexity is not related to voice but to the extent of decision-making that is required from the person handling the work. A lot of the outsourcing work done in India is call centre work but that does not mean that all of it is commoditised.

We donÆt look at our business as voice and non-voice. The part of our business which is call centres involves the agent executing complex transactions on behalf our customers û it is ôunscriptedö. We give them a target on the call which is executing a transaction on behalf of a customer or ourselves.

What is your strategy to grow revenues?
Our strategy to win business is to see how we can move across the value chain to service our customer across as many services as possible. We have customers with whom we have started with one process and are now doing 40 processes.

Let me take as an example mortgage origination for a bank. We start by doing the processing that happens when the application comes in then hand it back to the bank to do the underwriting then take the file back and do the entire processing. Now we could also be doing the underwriting for the bank.

We move up the value chain by creating confidence in our customers regarding your delivery capabilities. That is our strategy.

What made you decide to IPO?
We listed five years into our history when we achieved a level of predictability in our business and were large enough. As a public company we have some advantages. We have used acquisitions to grow and stock provides a currency for acquisitions. This has helped us to build our image. Customers can get more information on us and often have a higher degree of comfort with respect to a listed company. For our employees ESOPs of a listed company are a tool for motivation which helps us to retain people.

How do acquisitions form a part of your growth strategy?
Acquisitions are a very important weapon in our armoury but to keep a weapon powerful you have to use it selectively, as we do. Around 20% of our revenue is derived from our acquisitions.

In this business it is very hard to get into new areas in which you donÆt have capability. We acquire a capability then use that capability to sell it to existing customers or go out on the back of this knowledge and win new customers.

What is your geographical diversification strategy?
We believe that a global delivery model is critical. We are setting up operations where our customers are. There are processes the customer will not want to be outsourced and where it is important that the centre be near the customer.

We now have six centres in the US employing 1000 people and 2 centres in the UK employing 1000 people. Our centres in the UK came up because an existing customer asked us if we could take up processes for them onshore.

Our clients are asking us to take on services in the Indian domestic market. This is a market which has evolved in the last few years û our clients are looking for international quality offerings from companies such as us.

We are now targeting Indian companies keen to outsource processes to us. Note that labour arbitrage does not play any factor in this. We expect that next year our India business will be 10% of our overall revenue. It is small but growing satisfactorily.

We have a delivery centre in Argentina which employs 400 people. We will set up in the Philippines shortly with about 200 people. We are looking at Eastern Europe as a delivery centre.
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