Sramana Mitra: I see. So, you wanted to be in a space that is optimal to HP’s sweet spot, and you don’t have any conflict of interest when it comes to going to market through HP’s channels.
Gopinathan Padmanabahn: Exactly. That’s right. That’s the second reason. First and foremost, we are good at this, have several customers; we’re doing a great job, had long-term relationships.
SM: What percentage of your business is in financial services?
GP: About 43% of our revenue will be from banking, financial services, and insurance (BFSI).
SM: You have a substantial presence in financial services already.
GP: That’s correct.
SM: OK. If you would, please talk about your specific role in the company.
GP: I’m an executive vice-president and I head global delivery for MPhasiS. Global delivery is almost the entire service delivery that we provide across – we call them towers – across all towers: application services, infrastructure services and business process outsourcing (BPO). The service delivery is up to me. Out of 40,000 employees, about 37,000 will be part of my organization and handle the service delivery.
A small amount of delivery is done outside of my organization. We have a group called New Ventures that’s primarily focused on building new service offerings and incubating new businesses. We are incubating in the area of product innovating services and payment solutions. That’s outside of my area. The infrastructure services that we provide for our data customers is managed by a group that we acquired last year. It’s still a separate entity. Other than these two groups, other service delivery work is managed by my organization.
SM: Would you talk a little bit about the distribution of your company? You said you have 40,000 employees. Where are they based?
GP: About 92% of them are based in India.
SM: Where in India?
GP: We have multiple locations in India. The key service delivery locations for India are Mangalore, Chennai, Pune, and Mumbai. They are the four areas where the bulk of our delivery happens. The delivery location in Bangalore is where we have our leadership training institute, our campus where we hire fresh college graduates and put them through a boot camp training. Other than that, we have several small tier 2, tier 3 locations, primarily to deliver services to the Indian BPO industry. We do a fair amount of BPO work for Indian companies. There, the price points are very competitive, and we need to maintain a lead cost structure. So, the domestic BPO work that we do is delivered from tier 2 and tier 3 locations such as Baroda, Pondicherry, Indore, Raipor, and so on.
SM: How many people do you have spread across these tier 2 and tier 3 cities?
GP: Roughly 11,000 to 12,000 people.
SM: Oh, so a substantial number of people.
GP: Absolutely. The domestic BPO, the head count that we have is quite high.
SM: Now, what are the trends in the financial services industry, and where are you seeing the traction?
GP: The immediate scenario that we’re seeing right now is, unfortunately, a bit of a slowdown. We just emerged from the sub-prime crisis in the U.S. We were recovering, and the whole world got worried about the euro crisis, which has been going on for quite some time now. As we all know, when there is uncertainty, immediately, people get cautious with discretionary spending. We’re seeing is a bit of a cut or delay in discretionary spending. The new projects are getting delayed or clients aren’t launching new projects. So, we do see a slowdown globally.
Another thing that we’ve noticed is that people are trying to adopt some of the emerging technologies to provide customer services. So, despite the slowdown and air of caution, the largest banks that we service are trying to enter new areas. For example, we delivered some of the early mobile solutions on mobile devices, iPad, and so on, to some of the leading banks. They’re trying to expand their customer bases and expand their customer service offerings on multiple channels, especially on mobile devices.
CRM is always an area of top focus. They’re spending more and more on customer relationship management, customer services, customer engagement, that kind of initiative. We some amount of traction in those areas. One phenomenon that we just got out of, especially in 2008 and 2009 when the U.S. going through a bit of turmoil due to the sub-prime crisis, many large customers did a vendor consolidation exercise. They were having services delivered by multiple vendors and realized that, based on advice that they received, that is was a good idea to do vendor consolidation. So, many of them went through their portfolios and asked their vendors to bid for them, but they reduced the number of vendors and handed over larger portfolios to their vendors, seeking better prices, lower costs.
These are some of the broad, high-level industry trends we are seeing in the BFSI space.