India-based BPO pure-play, Firstsource, lost more of its shine outside of the UK (see UK growth shines at Firstsource) in Q1 (to 30th June) with worldwide headline growth of just 7% yoy, to Rs5.2b (c.$115-120m), 4% down qoq. Operating margins more than halved to 4.0%. However, UK revenues grew 21% to around £23m (constant exchange rates), boosted by its win at Barclaycard (see here). The UK represents about a third of Firstsource’s total revenues. UK-based MD and CEO, Matthew Valance, alluded to low volumes in several business lines, though on the ‘bright side’, domestic attrition was down from 91% to 82%, so I guess you have to be thankful for small mercies.
Firstsource is, unfortunately, just the type of BPO pure-play we referred to when we were talking about Genpact’s results (see Genpact on track for low-mid-20’s growth). It has a huge challenge to lift itself up into full-line business process services; if it doesn't, we think Firstsource risks looking more like ‘Lastgasp’!