Environmental awareness trends in India - Reports from Accenture, Firstsource, MedAssist...

Weekly news updates on trends and happenings in the Indian Outsourcing Industry

This week’s newest development in the outsourcing industry was within the environmental awareness arena. Outsourcing vendors now have to follow ‘green’ policies laid out by the US and EU clients. Contradicting some earlier reports, the sub prime is finally starting to hit the Indian outsourcing industry. Some outsourcing vendors have already started feeling the pinch due to the reduction in the work outsourced from their mortgage industry clients. Significant number of acquisitions and BPO deals were completed this week. Accenture, Firstsource, MedAssist and Apollo Health Street were some of the parties involved in some such deals.

- Chillibreeze Business Research Team

Outsourcers warned 'go green or get dumped'

Outsourcing vendors are running the risk of being dumped by customers if they don't have any green policies or are perceived as environmentally unfriendly. Buyers are increasingly including green and environmental criteria in the vendor selection process for outsourcing contracts, according to The Black Book of Outsourcing report from consultancy Brown-Wilson.

A fifth (21 per cent) of European companies and US that already outsource have added green policies and performance indicators to outsourcing agreements during 2007, according to the research. Almost half (43 per cent) of first time outsourcing customers also added green issues in their selection process and 18 per cent included them as contractual goals in agreements.

Nearly all (94 per cent) of the companies surveyed plan to add green clauses to outsourcing contracts during renegotiation but only 36 per cent are planning a move to greener outsourcing in the next year.

4 September 2007
Source: ZDNet Asia

Currency Economics- India’s outsourcing may not be a dog yet

A recent report looked at the finances of Indian computer software companies through an unusual lens, examining what these superbly successful businesses might look like minus a favorable exchange rate. The results of First Global Securities Ltd’s study are quite shocking. If it weren’t for the 36% depreciation in the Indian currency in the past 11 years, the latest full-year profits of the top five Indian software services exporters would be lower by anywhere from 40% to two-thirds, the report shows.

The high net profit margins of Indian software companies, in a 19-27% range, are only possible because of a “currency subsidy,” First Global says. “Stripped of that, the business looks like a dog,” the firm said in its note.

Most Indian software exporters are looking at an increasingly disadvantageous exchange rate as their biggest long-term challenge. They’ve won a temporary reprieve thanks to the subprime-related seizures in the credit market and the attendant loss of appetite for emerging market currencies.

The exchange rate, at the end of last week, was 40.88 to the dollar. On 24 July, when the currency was at a nine-year high of 40.27.

For now, the Indian economy seems to be surprisingly resilient to both a stronger currency and higher interest rates. An appreciating currency is a bigger challenge for Indian software vendors than the prospect of a marked slowdown in the US economy. A US recession, were one to occur, would be a problem in the short run and may even spawn new outsourcing opportunities as more American companies try to prune costs.

04 September 2007
Source: livemint.com

Accenture wins BPO contract from United Utilities

Accenture is helping United Utilities, which manages and operates electricity distribution and wastewater networks in northwest England, improve its customer service performance through a nine-year business process outsourcing agreement.

Accenture is responsible for delivering all services across back-office functions related to income, debt recovery and billing operations. Financial details of the contact were not disclosed.

As part of its customer-service initiative, United Utilities has brought its call centre operation back in-house, with operations concentrated in Whitehaven, Cumbria. The centre had previously been outsourced to Vertex.

03 September 2007 
Source: Consultant-news.com

Apollo Health Street buys Atlanta-based BPO co for Rs. 697 cr.

Apollo Health Street (AHS), a global healthcare outsourcing arm of the Apollo group, today announced the acquisition of Atlanta-based BPO and enterprise support solutions company, Zavata Inc, for Rs 697 crores.

The fourth acquisition for Apollo Health Street and the second in the US provider space, it strengthens AHS's position as a leading provider of outsourcing solutions to the healthcare industry, Apollo Chairman Prathap C Reddy told reporters here.

While the Bank of India and Barclays Capital had agreed to lend Rs 550 crores for the acquisition, the rest would come from internal generation, he said.

The acquisition would also make the combined organization the largest healthcare BPO organization in the country with a significant IT business, Reddy said.

The company, which is setting up a back office at Chennai, would employ 400 persons initially, which would go up to 2,000, the Apollo chief added.

Both AHS and Zavata have trained professionals in their service centers in the US and India, allowing them to leverage technology, time zone differences and human expertise to deliver the right solutions to their clients, Reddy said.

30 August 2007
Source: The Hindu

India's Firstsource Solutions buys U.S.-based MedAssist for US$330 million

Indian outsourcing company Firstsource Solutions Ltd. has bought U.S. healthcare company MedAssist Holding Inc. for US$330 million (€242 million), an acquisition intended to help the Indian firm boost it clientele among American hospitals.

Firstsource, which announced the all-cash deal Wednesday, provides insurance processing services to U.S.-based health insurers, and has been looking to expand its business by managing the administration, including cost management tasks, of U.S.-based hospitals.

MedAssist, based in Louisville, Kentucky, handles finance-related back-office work for the U.S. healthcare industry and employs 1,400 staff. It has over 1,000 clients including hospitals and large physician groups.

Currently, the hospital care market in the U.S. is worth about US$700 billion (€515 billion) in revenue, and the administrative costs management market is worth about US$100 billion (€73 billion), which provides a huge opportunity for Firstsource, Mukerji said.

Firstsource shares rose 4 percent to 82.60 rupees in early trade on the Bombay Stock Exchange.

30 August 2007
Source: International Herald Tribune

India's Wipro Technologies to open software center in Atlanta, plans to hire local graduates

India's Wipro Technologies Ltd. plans to open a software development center in the U.S. city of Atlanta that will employ mostly graduates from colleges and universities in the state of Georgia, the company said.

Wipro Technologies, which is the global services arm of outsourcing company Wipro Ltd. will start the center with 200 employees and scale it up to 500 positions in three years, the company said in a statement released late Monday.

The center is part of Wipro's strategy to build global delivery capabilities and will significantly increase the company's presence and base of local hires in the United States,» the statement said. Western companies routinely shift information technology jobs to countries such as India, where wages are low and skilled workers are easily available. The practice has hugely benefited Indian software companies, some of which are now setting up centers outside India to compete with IBM Corp., Accenture and other global computer services companies.

28 August 2007
Source: PR-inside.com

US subprime crisis hits Indian outsourcing companies handling mortgage processing

Indian outsourcing companies that process mortgages are seeing a decline in work orders and loss of revenue because of the U.S. subprime crisis. Several companies have started redeploying their staff, moving some of those assigned to mortgage documentation and related services to other areas. Some company officials fear there could be layoffs if the crisis in the United States deepens further.

As U.S. lenders tighten credit, and some — such as GreenPoint Mortgage — close down, the volume of paper work done by Indian outsourcing companies declines because of fewer applicants and fewer people getting loans.

Bangalore-based Infosys Technologies Ltd. and iGate Global Solutions Ltd. have also redeployed about 50 and 100 staff respectively due to the winding up of their business with GreenPoint.

Bigger companies such as Infosys Technologies Ltd. say they do not face much downside as mortgage processing forms a very small part of their business.

Although no firm number is immediately available for the industry, analysts say the crisis in the United States could wipe off 3-4 4 percent of revenue earned from companies engaged in outsourcing business processes such as mortgage documentation.

27 August 2007
Source: International Herald Tribune