'New'
CEO, Rajesh Subramaniam, has his work cut out at Mumbai-based offshore BPO player, Firstsource, though this should come as no surprise given his prior tenure as CFO (see here). Like much larger peer, HCL, Firstsource is still firmly trapped at the low-value end of the BPO market, with the attendant problems of rampant attrition and pitiful margins.
For the year ended 31st March 2012, headline revenues at Firstsource grew by 10% to Rs22.55m (around $450m), but operating margins more than halved to just 4.2%. Annualised ‘Domestic’ attrition (India and Sri Lanka) was running at 96% and ‘Offshore’ attrition (India & Philippines) at nearly 60%, both higher than the prior quarter. HCL’s BPO unit has only just returned to profit (accent on the ‘just’) after 2 years of losses, and annualised attrition is running at over 90%.
On the slightly brighter side, Firstsource's Q4 revenues were 14% higher yoy and margins improved sequentially to 5.0%. But trying to do ‘more of the same, more efficiently’ will simply leave Firstsource (and for that matter, HCL BPO) stranded. There again, I guess someone has to do the grunt stuff.