2. WIPRO-SPECTRAMIND: Icon of Success

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

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.