HCL was one of the first major IT services firms to foray into BPO, much before the IT industry had seen the big opportunity in this area. It was also a pioneer in what has now become an industry normacquiring an onshore center (Apollo contact center in Belfast, Northern Ireland from British Telecom) that gave HCL BPO onshore delivery capability and won a big client.

Since then, though the company has grown mainly organically, acquisitions have remained on its radar. A year back it acquired assets of the AnswerCall Direct contact center in Armagh, Northern Ireland. Subsequently it tried hard to acquire an Australian BPO but was thwarted by VC companies over pricing.

Northern Ireland has proved to be a happy hunting ground for HCL BPO contributing over $50 mn in revenues. In fact, Europe itself contributed $121 mn in contrast to the US revenues of $44 mn this year, growing nearly four times. The European success also ensured that HCL BPO was protected against the US dollar depreciation.

Much of this success was owing to BT, by far the single largest client contributing over 60% of HCL BPOs revenues in FY 07. That has, however, always been the trend with HCL BPO which has focused on fewer clients with higher margins. In FY 07 the top 10 clients contributed a whopping 92%. While this ensured a healthy bottomline, even a traditional non-conformist like HCL acknowledged the need for both horizontal and vertical diversification.

Toward that end, it is seriously scouting for a US acquisition. The crusade to increase non-voice revenues too gathered momentum, with a target to reach a 50:50 ratio in two years time. Today voice accounts for 90%. Not only is that high, there are no parallels among BPO operations of IT services players. The acquisition may help change that ratio as well. The mandate for the company is to look at an acquisition in the $100 mn range in the areas of F&A and transaction processing. DQ

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