FACT FILE CEO Raman Roy POSITIONING Voice-based tech support and customer help desk STARTED IN 2000 OWNERSHIP 100 percent owned by Wipro REVENUE (2002-03) Rs 19,751 lakh NO. OF PEOPLE 8,492 (30 Sept 2003) CORPORATE ADDRESS 239, Okhla Industrial Area, Phase 3, New Delhi 110020 WEBSITE www.wipro.com/spectramind NO OF CLIENTS 15 QUALITY Six Sigma initiative COPC certified LOCATION FACILITIES: 7 (Delhi—3, Mumbai—1, Pune—1, Belapur—1, Chennai—1) SALES & MARKETING: US, UK

Wipro-Spectramind has emerged as the industry’s pinup boy for success story. Its valuation of $131 million at the time of its acquisition by Wipro Ltd in July put the limping BPO industry back on the funding track. The company’s valuation at 2.7-2.8 times its forward sales is the highest not only in India but also among global BPO companies which is anywhere between 0.4-1.1 times the forward sales.

Coming within the Wipro fold meant two benefits for Spectramind—an ability to scale the business sustainably because of Wipro’s deep pockets and tremendous customer traction. From just eight clients before the acquisition, Wipro-Spectramind doubled the client base to 15 clients while only marginally increasing its marketing costs—the marketing team increased from 10 to just 16 people since last year.

Secondly, not only was the acquisition strategic but it was timely because 2002–03 was the phase when the ITES industry experienced exponential growth contributing 25 percent of the country’s software exports. The erstwhile Spectramind desperately needed funds for a quick ramp up or face the threat of being left behind. And ramp-up it did, by growing from just over 2,000 people in March 2002 to more than 8,000 people by September 2003. It also expanded its facilities from Delhi to Mumbai, Bangalore, Pune and Chennai during the last one year and is now scouting the Asia-Pacific region for a possible buy-out.

Wipro-Spectramind’s momentum places it among the few Indian third-party BPO companies likely to touch the $100 million mark within the next year and a half. The company showed strong financials during 2002–03 registering profits of $ 9 million for the first time. What is worth noting is that the company’s per seat revenue realization at $13.34 is among the highest in the industry considering that over 80 percent of its offerings are voice-based where margins are typically low and also because its scale of operations is large. The realization, of course, has declined from $14.50 in 2000–01 to $13.34 in 2002–03. This implies that Wipro-Spectramind has been able to command a premium in its billing.

The risks for the company is twofold: a heavy dependence on a single client that accounts for as much as 44 percent of its revenue and a considerable part of its operations (close to 13 percent) being telemarketing, whose future is in question after the implementation of DNC. Also, other white spaces like collections, where its footprint is small could be more aggressively pursued.

However, unlike many other IT services company promoted BPOs, Wipro Spectramind may not go all out after financial services, as the parent itself has a technology and telecom exposure. The share in telecom could go up in the revenue mix. Its major clients include Dell, AOL, Delta Airlines and Friends Provident among others.