October - 2004 issue > Cover Story

By Karthik Sundaram

The last time vikram talwar spoke to siliconindia, EXL Services was in the midst of a very exciting phase. The Talwar-Kapoor-Wendt led BPO company was being acquired by Conseco [NYSE:CNO], at a time when BPO was not even a blip on the radar of most service vendors. Rich deals hung low for the plucking, the niche EXL occupied was hearteningly scarcely-populated, and India was not so chaotic in its human resource migration—things couldn’t be better.

In a short quarter,things changed. Rohit Kapoor, the co-founder of the company, and now President and CFO, and Talwar bought back the company, recapitalizing it with funds from Oak Hill and FT Ventures. In a remarkable turnaround, EXL turned profitable in early quarters of 2003, and is projecting revenues exceeding $60m for 2004. Talwar has moved to India, while Kapoor works with a core marketing team out of the New York offices. Clearly, while the market focus has remained intact, the duo has learnt how to keep the growth figures upward. “If we want to become a $1b company, there are some evolutions we need to engender,” says Kapoor, an IIT-IIM product who worked in Wall Street before teaming up with Talwar. “It is not going to be possible to grow by simply adding people—linear growth can get you only so far.”

Today, Kapoor is driving EXL Service to grow the advisory business, which has added 12 percent to 2003 revenues, and expects it to be a 20 percent component in the coming year. “The processing part of the business will continue to add to our linear growth, but the impact we have been able to make on our clients by our advisory services has been phenomenol,” reveals Kapoor, whose 10-month old new business now has about 70 experienced advisors. This business includes helping clients in identifying and analyzing their offshore outsourcing processes, and building a roadmap. The service also enables a client to document the process—and this is important, says Kapoor, because many times the process owner is the only source for knowledge about the process, and that knowledge is lost if the person moves on or out. Wendt’s legacy left a deep GE culture in place, where EXL has nurtured the Six Sigma process engineering expertise, and now deploys its Black and Green Belt team leaders to evaluate client processes, helping them re-engineer them for higher efficiencies.

In business risk advising, EXL plays an advisory role to companies in meeting the Sarbanes-Oxley compliance, and now is moving forward to help them establish internal audit systems for the coming years. The Sarbanes-Oxley Act of 2002 (SOX) has a mandatory internal control reporting requirement for SEC registrants and their independent auditors. Specifically, Section 404 of SOX mandates the SEC to adopt rules requiring issuers to include an internal control report that contains management's certifications regarding the effectiveness of the company’s internal control structure and procedures over financial reporting. EXL's Business Process Risk Advisory Services Division, a team of certified accountants, internal auditors and process experts helps companies meet their SOX 404 challenge by designing and implementing a flexible solution that delivers immediate value. After years of rigorous process oriented experience for a diverse array of clients, EXL’s team has developed expertise in documenting critical business processes, identifying gaps in the internal control structure and making recommendations to improve controls.

“Another issue of importance in this evolution has been our stepping out of India,” Kapoor says. Clients that have used EXL Service are now utilizing EXL’s service offers at the individual global operation sites. The next year’s focus is to grow its new offices across other geographies, and find talent that would fulfill its needs. “If you were to map our financial growth, we can scale up much easier than a typical IT services company, since our revenues are tied in to annual contracts, over which we can layer our new services,” he says. With a selective acquisition strategy, EXL has managed to emerge the leading player in its niche, as it drives end-to-end fulfillment for the insurance and banking sector. “Insurance brings us about 60 percent of our revenues, and EXL is possibly the only company that can offer the deepest domain expertise in the total process management,” comments Shiv Kumar, the chief marketing officer.

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