SSON: What have been the biggest changes to the outsourcing space while you've been involved?
Neeraj Bhargava: I've been involved in many ways with outsourcing for nearly two decades: the last eight years with WNS, and prior to that the bulk of my career was spent with McKinsey & Co where I worked with numerous IT services companies and other areas of outsourcing. If I were to look back at, especially, the last five years or so, there have been three big changes that have happened in the outsourcing space.
First of all it's no secret that it's truly turned global. We've seen the advances that have happened in communications technology and in general the rise of global trade and integration. People have got very comfortable running parts of their operations in other locations, which therefore resulted in the rise of India now, the rise of Ireland a bit earlier, as a key shared services or outsourcing location, and the increasing usage of locations like the Philippines: these are all things that have really accelerated significantly in the last five years. So outsourcing as a global phenomenon is a very big change.
The second big change is that it's become more widespread, with companies across different industries embracing the trend. About five years ago, it largely involved the financial services players and the telecoms players, and to an extent technology companies and the IT area who were the major early movers in outsourcing. Now multiple industries, multiple categories of trade - not just large companies - and quite often private equity companies - are playing a very big role in pushing their investee companies into outsourcing. So the trend is now widespread, and in some ways, the development of WNS as a company as we expand the industries that we address reflects the evolving trend in the market.
The last point is that outsourcing has become a very specialised industry, and therefore people who are successful in this area are very focused around doing this well. Our WNS clients are increasingly demanding more industry expertise coupled with operational expertise and therefore, like any other industry, as it starts to mature, people who are very specialised and can develop unique solutions for their clients are the ones who become very successful.
SSON: What do you see as your biggest challenges day to day?
NB: WNS has been fortunate to take advantage of opportunities that have allowed us to grow at around 40 per cent year on year, and even in a difficult economic market we foresee ourselves growing quite steadily over the next couple of years. If you just look at some pure numbers here we were just about a $15-million company in 2002; we finished last year with revenues in excess of $450 million. So it's just the level of growth that we've experienced and what we see going forward, our biggest challenge is in managing growth, preparing the company in the sense of having the right organisation, and the right capabilities to take advantage of the opportunities that are coming to us. And overall I think that we are at the early stages of outsourcing; there is much scope for creative outsourcing camisetas futbol tailandesas solutions and sourcing functions or processes that we have not tapped yet.
Recent studies by McKinsey & Co and some of our industry associations suggest that the relevant market is about $250 billion. Right now the market that we are tapping is barely $10-$15 billion, so we still have a long way to go. And the biggest challenge continues to be managing growth and preparing for what is coming.
SSON: Are you worried about the credit crunch?
NB: I think the credit crunch camisetas futbol tailandesas and what is possibly recession, high inflation, does create a difficult environment for our clients or our prospective clients. They're seeing a lot of dramatic changes in their business. That creates two issues simultaneously: first, the need to cut costs and focus on core business; and second, they perceive that need to be more acute. That is, in fact, very positive for our business. The flip-side to that is that there is also a lot more pressure on dealing with day-to-day issues, there will be more M&A activity, people have less money to spend on change: these are distractions that sometimes constrain them from taking outsourcing decisions. So it's a bit of a mixed bag.
But overall I think if you looked at what happened after the last recession, in the early part of this decade, that was very positive for us... So our view is that in general people have been a bit shell-shocked by the rapid changes in the economy, but at least in the US people have begun to understand that they need to make the rapid, sustainable change represented by outsourcing, so organizations are compelled to pursue a broader range of outsourcing options. We think that Europe is following the same pattern.
SSON: You have an increasingly diverse operation now and are growing rapidly year on year. Where do you see your next expansion taking place?
NB: Overall we've been very public about this: WNS will have a global footprint. In that context, what we've done so far is keep India as a very strong base for us but on top of that we've added more onshore operations in the UK, we've added Romanian capabilities, we've got capability in Sri Lanka, we recently completed a joint venture in the Philippines as well. This is a fairly diverse footprint already but there are three other missing pieces: we need a presence in Latin America, to deal with opportunities there as well as Spanish-language requirements in the US; we would be silly not to consider China as an important location to enter given all the opportunities that are there in that market; and last but not least is - as we've done in the UK for some specific operations ? having some onshore operations in North America as well.
So we have three areas where we will fill in some gaps, but at this point in time, we're very focused that in the next twelve months our biggest priority is to ensure that our recent expansions in the Philippines and Romania gain scale rapidly, and we're focused on ensuring that these locations grow at the same rate as what we already have established in India, Sri Lanka, and the UK. Our sense is that the expansion into the other three geographies ? which are imminent ? will occur in the next fiscal year.
SSON: You mentioned Romania: why?did you decide?to go there?
NB: Romania presents a very rich opportunity for WNS to tap into a workforce who can work in all the four major European languages: Italian, French, German and Spanish. We find a very good population of professionals who can work in all those languages. So that was one point. The second is that the employee culture of those working in business services, coupled with the fact that there were some early movers who had set up shop there and whose experiences had been very positive, was positive, and to top it off, there are many parallels we found between the business culture in Romania and what has emerged in parts of India. We have been very impressed by what we see; it's a pretty important expansion for us, and it's the springboard for what we can do more broadly in continental Europe.
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