Rediff.com  » Business » MsourcE plans new centre in China

MsourcE plans new centre in China

By R Raghavendra in Bangalore
June 20, 2003 12:24 IST
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MsourcE, a subsidiary of MphasiS BFL Ltd, is likely to open its new facility in China by the end of this fiscal.

The Rs 93.6 crore (Rs 936 million) company has stated in its latest annual report that it is also evaluating other destinations in South East Asia. However, current situations seem to favour China as the right location.

The fact that its parent, MphasiS BFL acquired the entire stock of Navion (Shanghai) Software Development Company Ltd during the quarter ended March 31, 2003, seems to have augured well for MsourcE.

"We will try and leverage our facility in China, its people and infrastructure to further develop our BPO capabilities. We are focusing on one strategic location every year," Bhaskar Menon, president, MsourcE Corporation, said.

"We are ensuring that we pump enough business into the Mexico facility for the next 12 months before we start operations in another location. We have not decided whether it is going to be China, but that's what it looks like," Menon added.

He said China was an easier proposition as MphasiS already had its people there who knew the market and had an understanding of Cantonese, Mandarin and Japanese languages.

"The people who speak these languages share about 100 million credit cards between them. We have seven clients with large businesses in Asia. These clients have customers who speak these three languages. So all factors favour China, but we have not taken a decision yet," Menon explained.

A final decision on the location of the new facility is likely to be taken at the company's board meeting scheduled for July 9, 2003.

"Though we have space to ramp up our Mexico facility and expand to nearly 300 people, we do not intend to build before hand. The new centre will also be very small in size with about 50 seats and 70-80 people," Menon stated.

Currently, MsourcE has facilities in Bangalore, Pune and Tijuana, Mexico. It employs nearly 3,000 people.

As part of its expansion plans, MsourcE will not only add 2000 people by the end of this fiscal, but is also confident of adding 4-5 new clients during this time.

Most of the recruitment would happen at the Bangalore and Pune facilities. With an attrition rate of 35 per cent across four locations, the company spends nearly $8,000 to set up a seat.

Though the Mexico centre took off in February and has been servicing one client, the company has ensured that all the systems and processes are in place.

"We started the Mexico centre in February and have just started marketing the facility," Menon said.

MsourcE has chalked a guideline for 100 per cent growth in its topline this fiscal, and according to Menon, the company is well on track to achieve its target.

Menon feels the current opposition to BPO outsourcing from a few states in the US is only a temporary glitch.

"The media has been playing up these issues. This coupled with elections in the US next year has resulted in some noise and excitement. It will definitely pass away," he said.

He said MsourcE is currently working on initiatives that will clearly help the company move up the value chain in the BPO space.

"How far we move up the value chain is evolutionary in nature... we will have to wait and watch. But there will come a time when companies, especially those in the financial services sector, will want to 'in source' certain jobs (like asset management, credit scoring, investment banking). I think it is definitely going to happen."

Menon feels "expectation is getting ahead of reality" in the BPO space. According to him, it is the base level jobs that will continue to bring in volumes.

"Currently, too many companies are competing for very little business. Consolidation is inevitable and it will happen. It is a good thing for the industry," he added.

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