IT firms' BPOs report lacklustre results for Q3
25 Jan 2012
India's technology majors had healthy numbers to report for the October-December quarter but their BPO businesses stayed flat to marginally lower for three of the top five IT services firms. Back-office businesses had been growing in line with IT services in the past few quarters but in the past six months, the total value of BPO deals had hit the lowest in the past three years.
An analysis by advisory firm KPMG, showed that the total value of BPO deals signed globally in the October-December quarter was $7.7 billion (deals above $5 million), only somewhat better than the preceding quarter. Typically in a healthy quarter, IT companies are able to garner BPO deals worth around $10-12 billion globally. This slowdown was seen in the third quarter BPO numbers of Infosys, Wipro and HCL, which saw revenues slacken due to project delays, fewer deal signings and internal problems.
According to Wipro CEO TK Kurien, the problems of the past were catching up with them. He added the company's sales engine was not doing too well, but it would clean itself out.
He added, in Q1 of next fiscal, Wipro should start seeing the opportunity according. He added, Wipro's BPO business, which contributed around 9 per cent to the company's total IT services revenue of over $5 billion, saw the topline decline 1.2 per cent in the October-to-December quarter as against the previous three months.
With BPOs, IT services firms can offer a greater range of services to customers as BPO deals can be bundled with IT services. The BPO firms are important as they gave firms sticky annuity business.
Rival Infosys' BPO business was down 1.6 per cent in the quarter ended December which the company attributed to slower start of projects.
Meanwhile, the IT turf has been hotting up like never before in West Bengal. Two of the country's software giants, Infosys and Wipro Technologies -- are betting big on the state. While Infosys is setting up its maiden sofware campus in Kolkata, Wipro is on an expansion drive.