The speed at which the ITeS-BPO sector is maturing in India is really astonishing. The industry, now hardly a decade old, has seen many waves of consolidation and cross-border mergers. The sector has also seen within its short life increasing focus on particular domains and moving up the value chain in terms of providing high-end outsourcing services. Unlike its older sibling, the software services sector, the BPO sector didnt get too much time to grow into a mature industry.

Of course, maturity has come with solid growth. According to Nasscom, the ITeS-BPO industry has grown to $8.4 bn in fiscal 2007 from $6.3 bn in the last year, clocking a healthy 33% growth. The domestic sector also contributed a reasonable 14% to the overall sector revenues, which now directly employs over five lakh people. Given the size of the global BPO market at around $150 bn, the scope of growth for the sector remains buoyant, notwithstanding country level competition from other third and second world countries.

There are only a few publicly listed BPO companies in India at this point of time, though given the number of large BPO companies already in India, this could improve in the medium to long term. The two well-known companies listed on Indian markets include FirstSouce and AllSec Technologies.

Allsec Technologies: Decline in Sales and Profits
Chennai-based Allsec Technologies is a pure play, third-party BPO company offering both voice and non-voice services established in 1998. The company provides BFSI, tech support, quality assurance and HR processing service. The company has currently around 3,000 employees on its pay roll. The net sales for the quarter ended June 30, 2007 was Rs 25.90 crore against Rs 26.66 crore for the quarter ended June 30, 2006, recording a marginal negative growth of 6%. Profit after taxes was at Rs 45.73 crore against Rs 67.78 crore recording a downward movement of 32%. On a sequential basis, profit after taxes was lower by 34.62% compared to Rs 69.92 crore of the previous quarter sequentially. Similarly, for the year ended March 31, 2007, Allsec clocked net profit of Rs 24.07.63 crore compared to Rs 20.25 crore for fiscal 2006. Revenues stood at Rs 127.52 crore compared to Rs 93.90 crore for the previous year.

During the quarter, the company announced that it is setting up a new 200-seat facility at Trichy, Tamil Nadu, which is expected to become operational in the second quarter this year. The new facility will bring in additional manpower and will meet the growing demands of the existing customers. The company targets $100 mn business in the next two years from around $35 mn at present. To meet the growth target the company plans an acquisition in the US for around Rs 165 crore. Recently, Allsec has acquired 100% equity in B2K, a 600-seat facility located in Bangalore that is primarily involved in providing technical support services. On earnings prospect, the company has stated that it will grow by around 40% this fiscal year. The stock currently trades at Rs 178.

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