BPS pure play Firstsource is making headway in improving profitability under new owner RP-Sanjiv Goenka Group (RP). Following a better looking Q3 in which EBIT margins rose to 7.2% (see here), Q4 margins were better still at 8.6%, and a marked improvement on the 5% last year. Revenues meanwhile were up 14.6% to Rs. 7.13bn (£85.1m), although flat on the previous quarter.
The improved margins have been achieved at the expense of serious headcount reductions however, since some 6% of Firstsource's workforce has been cut during the year, amounting to 1,786 people. That said, Firstsource ended the quarter with 31,872 employees, pretty much flat on Q3.
Firstsource does have seriously high staff turnover at its domestic India-based centres, where annualised attrition runs just shy of 90%. Costs can be managed well during a particular quarter by not replacing those domestic employees.
In terms of the UK, this is now the fastest growing market for Firstsource thanks to renewals with key clients like satellite TV broadcaster Sky. In FY12/13, UK revenue was up an impressive 37.5% Rs 9.72bn (£115.9m), pushing the UK’s share of overall revenue to 34% vs. 31% last year. The UK margin however has taken a hit, presumably due to the increased investment needed to onboard new business. This was down to 10.4% vs. 16.5% last year.
Firstsource actually opened two new UK delivery centres in Belfast and Cardiff during the year, to provide customer service and technical support for Sky across its TV and broadband services. Firstsource won the three-year renewal back in July 2012 when it took on the two new centres and added 900 staff. Firstsource already has 1,000 staff in Londonderry working on the Sky account.