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In the history of the Indian BPO industry, we have seen companies who started
as independents and got acquired on the way, companies who turned from captives
to independent and companies who have managed to get good funding from some of
the best VCs. Here is a company that is an example of all these and more.
Starting out as a venture-backed independent company, EXL made headlines as
the first big BPO acquisition, when it was acquired by Consceco. And when
Conseco filed for bankruptcy under Chapter 11 in November 2002, everyone wrote
the company off. EXL was owned 100 percent by Conseco and 95 percent of its
revenue came from doing Conseco work. Not only did the company manage to
survive, it managed to rope in Oak Hill Capital Partners and FT Ventures and
also ramped up its client base from two in December 2002 to seven in March 2003.
Today, it is one of the top five BPO companies in India. The price it had to pay
was a year of flat growth.
And they just did not happen. After the Conseco bankruptcy, EXL took some
tough measures. It closed down two centers at Noida temporarily, initiated
cost-cutting measures within the company and restructured its operations putting
all its senior management team into business development roles. The measures
apparently paid dividends as the company not only began full capacity
utilization but also started on a massive recruitment drive around June this
year.
EXL expects to rope in over 3,000 employees this year and the company is
clear that such huge numbers would be difficult to attract within the metros. It
has set up recruiting offices in other A class cities like Chandigarh, Lucknow
and Kolkata offering leased accommodation as a sop to attract recruits. Migrant
recruits are less prone to job-hopping so EXL expects to address attrition
considerably with such initiatives. Attrition, an industry menace, has already
pushed up the average labor cost of the industry by 15—20 percent over the
last year.
It also productized its experience in the process knowledge by combining it
with the local IT pool and created a tool called PROMPT which has been licensed
to a few clients. This year the company has raked in 5—10 percent of its
revenue from such products which will increase to 15—20 percent next year.
EXL has built impressive momentum to be counted among the top contenders in
the third party BPO space. Although it has announced ambitious performance
targets of achieving $100 million mark during this next fiscal, analysts are
more moderate in their rating pegging EXL in the $50 million mark by next year.
The company’s financials look strong with year on year revenue growth, yet
its client-revenue ratio is still an area of concern with unhealthy exposure to
its top client at 43 percent. Its overwhelming dependence on BFSI as a vertical,
a legacy of the Conseco association may also change.