about the losses BPO is running up? "We made a few mistakes. We
started two centres. We should have started one, made that profitable
and then started the second. We also made errors when we negotiated
our early contracts. But it is not a serious loss. We will grow
and have double-digit net margins in the second half of this year,"
says Rao. That is also because upfront investment in BPO is typically
three times that in IT services. "Even Spectramind went into profits
only when they reached a headcount of 4,000 or so. In BPO you have
to invest ahead of the demand and make money when the demand and
capacity utilisation increases," says an equity analyst.
a headcount of 3,000 today, MphasiS BPO expects to make operating profits
over the six months or so. Group marketing director Aditi Malik
says: "I think this is right time to put the two (BPO and IT services)
together." MphasiS has taken some steps to move in that direction.
One is a clear organisational change. "We'll have global relationship
managers to deal with business heads of our clients," says Rao.
The idea is to sell MphasiS at a higher level in the organisation.
He adds: "The global relationship manager will then be able to drive
the BPO and IT services parts of the solution that go out to the
customer." This is to ensure that the customer does not have to
talk to two different parts of MphasiS and then hope that they combine
other thing MphasiS has done is it has hired people from its target
industry - banking, financial services and insurance. These are
the people that the global business heads can relate to. "These
people understand what should be offshored and where the problems
will arise. We will continue to increase their numbers," says Madhavi
Soman, head, business analysts group, MphasiS. Even now, among similar
companies, the ratio of business analysts to IT services professionals
is the highest for MphasiS (See 'Staffing patterns').
Rao has MphasiS at an interesting phase. Since it has already learnt
from its mistakes, it should be able to operate the two businesses
as part of a whole. How quickly it is able to offshore processes
like claims processing, loan services and origination over the next
year will be a test of its model.