Having presided over a slump in profitability in the last quarter and full year (see WNS margins take a dive), Alok Misra, CFO at offshore BPO pure play WNS is to step down in August following four years at the company. Kumar Subramaniam, WNS’ corporate SVP for finance, will then take on the role of interim CFO until a permanent replacement for Misra is found.
WNS’ performance since the year end appears to show more stability. In Q1 to 30 June, revenue less repair payments (RLRP) grew 4.9% to $102.6m, and up 2.8% sequentially. Adjusted net income (ANI) meanwhile grew 11% to $11.1m, pushing the margin up 100 basis points to 11%. However on a sequential basis, ANI was down 16% from Q4, due to the impact of annual wage increases and expenses associated with the acquisition of South Africa-based Fusion Outsourcing Services, which WNS bought last month from UK general insurer BGL Group for £10m in cash.
Fusion is a contact centre, customer care and business continuity outsourcer, with c1,500 employees based in Cape Town and Johannesburg. Apparently Fusion now provides ‘premium voice services’ to one of WNS’s largest UK-based clients. Hot Views readers will recall WNS’ largest UK client Aviva brought call centre activities back from WNS in January (see here).
Fusion is expected to contribute revenue of $9m - $10m for WNS in FY13. That works out at c$8k per head on an annualised basis. South Africa has always been a more expensive option for offshore BPO. However we suspect the wage hikes and inflation in India in recent years have reduced this difference significantly. During the quarter WNS also opened its first delivery centre in North America, in Columbia, South Carolina, where it will employ up to 300 people. Unfortunately for WNS this shift to higher cost delivery at home in India and now also South Africa and the US, is having a negative impact on margins.
Nonetheless, WNS raised its revenue guidance slightly for FY13. It now expects RLRP to be between $420m and $440m (vs. $410m and $430m previously), effectively y-o-y growth of 14% to 19%. This includes the contribution from Fusion, and an expected boost in organic revenues of $5m to $6m.