Friday, December 09, 2005

TCS - seeking growth in BPO

In all of the Indias IT services fraternity, TCS is one company which seems to be thinking on its feet. There has been an odd acquisition here and there by the other biggies, but TCS has been doing more in this space than any other.

The latest report is here, that TCS is eyeing BPO units in Europe.

...“The company will continue to acquire firms till we have a substantial presence in the BPO business and for the next one year, the focus will be only on European markets,” said Vandrevala. (TCS Executive Vice-President)

The company is also hopeful of clinching two outsourcing deals of over $100 million each. Vandrevala said the deals were likely to be finalised over the next one-two months. While one deal was stuck with the UK’s largest telecom vendor, the other was with one of the biggest banks in Europe, a company executive added.

TCS is targeting to increase its revenue from the BPO business to $200 million over the next two years, up from $45 million at present. The BPO segment accounted for a small fraction of the company’s revenue of $2.3 billion in 2004-05.

In comparison, the BPO business of Wipro contributed $148 million to its revenue of $1.86 billion. Infosys’ BPO revenue was $43 million out of its total revenue of $1.6 billion....

I like the approach of TCS to acquiring business in the BPO space. In the past few months, it has acquired FNS (Australia), Pearl(UK), a Chilean BPO and now looks to expand in Europe. The difference in this approach is that TCS is treating BPO like IT. In IT companies have small satellite offices across the globe, but BPO has been treated differently by the BPO companies. They have a huge center in India and perhaps some associates travel for a short duration. With their presence in various countries, nearshoring is an option. Nearshoring is a good way to connect to your clients who want to "see" operations, at times. Some work can be nearshored, while the bulk can be offshored.

As this model builds up in scale, TCS needs one breakthrough product (easier said than done to create, but one or a few acquisitions can get them there) to offer entire process outsourcing (and which one that will be can be deciphered from their recent acquisitions) to big clients.


Anonymous said...

The idea could be to create a non Indian identity and then create a brand image. Also to cater to non english speaking local european markets, it could be necessary to have local presence, but good corporate move, rather than working like a fly by night operator

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