Friday, July 18

TCS to focus on HR operations solutions

MUMBAI: IT services major, TCS, is scaling up its platform-based BPOs and one of its prime focus is human resources operation (HRO) solutions. “HRO solutions is gaining a lot of traction and we are in talks with a few clients. We have received letters of intent from these clients and are currently negotiating with them,” said TCS COO and executive director N Chandrasekaran. These deals would be announced in Q2 of the current fiscal. During the company’s analyst call on Wednesday, he had said that there were three clients in the loop.
The contributions of the BPO sector to the total revenues of TCS is 6.1% in this quarter, compared with 6.3% in the previous quarter. Analysts are bullish on platform-based BPOs and believe it’s a segment to watch out for. “This is a modest beginning for them (TCS). Not many companies have platform-based BPOs for HRO and since TCS is commercialising it in the beginning, revenues will come in at high profitability,” said Edelweiss IT analyst Viju George. For a platform-based BPO, which focuses on a particular vertical or process, the pricing methodology is different and non-linear. Vendor revenues are not dependent on manpower billing, but on the volume of transactions done. Customers are billed for the transactions that go through on their side. The company will be conducting a pilot project in health care domain with one of their customers this month. Revenue contributions by the life sciences and health care verticals saw a marginal increase of 0.2% quarter on quarter. However, there was 0.8% drop in the year-on-year growth. Mr Chandrasekaran said the retail, manufacturing and utilities sector were doing exceedingly well and would continue to grow in the forthcoming quarters. “Manufacturing has grown 20% in Q1 and we have announced a number of large deals. It contributed 10.7% of overall revenues and improved from Q4 by 110 basis points. Retail contributed 8.6% to the total revenues,” he said. Despite the global slowdown, the company is confident of growth in manufacturing and have deals in the pipeline from those already announced in Q1. TCS had previously announced plans to be a $10-billion company by 2010, not necessarily through inorganic growth. “Acquisitions will not be driven by wanting to meet a particular revenue target. What matters is after acquiring the company we need to be able to multiply the revenues,” said Mr Chandrasekaran

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