Serco Global Services, the business process outsourcing (BPO) business of the UK-headquartered Serco Group, has ambitions of tripling its revenues in the next four years, having got a major foothold in this segment through the acquisition of Indian company Intelenet for R2,800 crore in May 2011. Susir Kumar, executive chairman, Serco Global Services, tells FE?s PP Thimmaya about the company?s ambitions of adding consulting and IT capabilities to its portfolio. Edited excerpts:
How has the integration process with Intelenet come along?
Any large acquisition is always a concern though in our case the significant part of the objectives have been met. Serco wanted to expand from the frontline business and go into middle and back office, have presence in developing markets, and focus on the private sector. From Intelenet?s point of view, it wanted a partner who was bigger and had the freedom to run the operations. It has worked well on all these counts. There were questions on whether we will be able to get more business, maintain margins and integrate culturally. Now we have combined the middle and back office business of Serco with joint sales teams. In the last nine months we have closed deals with a total contract value of $1.6 billion. We have won deals in areas where we do not have big expertise but bagged it because of our size and brand. This merger has met all parameters with the management team intact.
How does Serco Global propose to expand?
Going forward we would be touching a revenue of $1 billion by the end of 2012 with a mix of 55% onshore and 45% offshore. We are aiming at tripling our size in the next four years and be on the top end of profitability. We have already done three acquisitions and looking at a dozen such opportunities right now. We would like to get into four new markets: South America, Africa, China and West Asia. We would like to build the company into an outfit which has got predictability of growth and sustenance of margins.
What new services will Serco Global will bring to its portfolio?
The one big transformation we are trying to build is a consulting capability. Our aim is help build better solution, process of executing the operation. It will have elements of design and technology focused on operations point of view. We have 300-odd people in this segment and it will intertwined with our operations. We get a lot of requests from companies who seek our advice when they get into new markets in terms of growth plans and operational efficiencies.
Secondly, we are also planning to build a technology services unit. As of now we buy a lot from the Indian IT companies but we are debating whether we will build this on a partnership model or our own. It will be a combination of both organic and inorganic opportunities with focus on areas such as infrastructure management, application maintenance, etc. Though I must add that many of the partners we have today in the long run will become our competitors as they are getting into the BPO space.
How is the deal pipeline?
We are getting deals from the Australian tax authorities and there are three large bids going on. We have won lot of deals in UK, US and there is significant traction in West Asia. At the same time, we are becoming extremely selective as we do not compete on price point alone. From our perspective, we do not sacrifice profitability and quality of our business for growth.
Will Serco continue to focus on the Indian domestic business?
It is a sizeable business for us though we doing some cleaning up operation and giving up 5-10% of it which is not very profitable. We will continue with this market and focus on good margins as it is core to our emerging markets portfolio.
