Essar BPO turnaround hinges on buyouts, outsourcing to India

Essar BPO turnaround hinges on buyouts, outsourcing to India
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First Published: Mon, Mar 12 2007. 12 08 AM IST
Updated: Mon, Mar 12 2007. 12 08 AM IST
Mumbai: The $2.2 billion steel-to-shipping Essar group claims to have turned around its loss-making business-process outsourcing (BPO) venture, Aegis, originally a US-based call centre it acquired in 2003, by acquiring more companies, and moving back-office work to India.
Today, according to the National Association of Software and Service Companies (Nasscom), Aegis is the eighth-largest BPO firm in the country.
“When we joined the company, it had 1,900 people and was losing $1.2 million a month on an annual revenue base of $62 million. We have now managed to grow the company into over 5,000 employees and after having reduced the losses have achieved a break-even level of operations. We expect to close fiscal 06-07 with a net profit of $16.5 million on revenues of $180 million,” said Aparup Sengupta, chief executive of Aegis BPO Services, part of a team that was brought in two years ago to effect the turnaround. Kannan Ramaswamy, president, Aegis, was also brought in at the same time.
And Richard Ferry, a director on the board of the firm and a member of its business transformation council also played a part.
Since then, Aegis has acquired four companies and is looking to acquire more. Its focus is on struggling US-based BPO firms that, according to Sengupta, have “high selling, general and administration expenses”, but “good clients and processes”. He added that there were “thousands of such firms” that could be found in the “$10 million to $30 million revenue range”.
Aegis is looking to take over a US-based BPO firm specializing in collecting unpaid debt after acquiring Global Vantedge, a similar $25 million company based in India .
“We are also looking to expand our Hispanic offering by acquiring a BPO in Latin American nations like Chile, Guatemala Mexico, etc.,” said Sengupta. The acquisitions are being financed by the Essar Group through its investment arm Essar Communications.
“The turnaround was also powered by the company’s decision to shift functions such as human resources management, marketing, finance and payroll management to India.
“We managed to reduce the selling, general and administration expenses of the company from around 27% of revenues to 10% of revenues,” said Sengupta, who expects the company to wipe out its accumulated losses of $50 million in the next two years. By then, he told Mint, the company would have grown its revenue to $500 million.
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First Published: Mon, Mar 12 2007. 12 08 AM IST
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