BPO services could overtake IT revenue: Infy

Bangalore: Country's second largest software firm, Infosys Technologies could potentially overtake information technology (IT) services in overall revenue. Infosys BPO currently contributes to around 5 percent of the firm's total revenue, said Chief Executive S. Gopalakrishnan. "If you take BPO (business process outsourcing) alone, it can be even bigger than IT services because that addresses something like 15-20 percent of spend for our client organization, whereas IT typically addresses 2-5 percent of expenditure for our clients," reports Surabhi Agarwal & K. Raghu from The Mint.

Ritesh M. Idnani, a member of Infosys BPO's Executive Council and its chief operating officer said that
Infosys BPO is aiming to quadruple its revenue to $1 billion (Rs4,730 crore) in three years, riding a rebound in demand for outsourcing. For the financial year 2009-10, it reported a revenue of Rs1,127 crore while Infosys Technologies' turnover was Rs22,742 crore.

A significant growth is possible in infrastructure management and systems integration, which now contribute only 7-8 percent of the total revenue. While Infosys BPO continue to target verticals such as finance and accounting and human resource outsourcing-- low-hanging fruits for the industry Idnani said there is a new focus around areas such as warranty support and digital commerce. Around 50 percent of the company's deal pipeline still comprises of finance and accounting-related contracts.

The firm is also increasingly cross-selling its outsourcing services with technology solutions. Over the past year, the company has signed deals worth a combined $65 million by bundling technology services with BPO. Around 60 percent of the total 92 clients of Infosys BPO are also customers of Infosys Technologies and we expect the number to increase," Idnani said. Some analysts who were at the Jaipur meet said the top management of Infosys Technologies is gung-ho about BPO operations.

"The company plans to invest heavily into the BPO business and there were talks of starting a BPO play to solutions such as Enterprise Resource Planning and the company's core banking product Finacle," said a technology analyst with brokerage India Infoline, asking not to be named. Nitin Padmanabhan of Indiabulls Securities Ltd said there is a lot of potential in BPO as more firms are moving to an operational expenditure model from a capital expenditure model, which will aid in the growth of outsourcing.