BPO Syntel future hinges on one client
By Annie Paul

Late 2008,  the highly regarded Black Book of Outsourcing published by the Brown-Wilson Group rated Syntel Inc as the top-rated BPO provider to the health insurance industry.  But Syntel insiders tell techgoss that employee morale is at an all-time low within the BPO as the next few months will determine whether its main client renews their contract.

Techgoss had learnt that 85-90% revenues of Syntel are derived by its joint venture with US based Global Custodian. It all started with Nitin Rakesh who was 'elevated' to the Board of Director's (essentially a non decision making) position from the CEO's seat in the Joint Venture. Nitin, chiefly responsible for starting and growing the BPO joint venture, chose to resign gracefully after a few months. During this period, the BPO was also affected with attrition across unit heads that had been with the BPO outfit from scratch, leading to a heavy management vacuum affecting growth and employee morale.

Very recently, their head of BFS BPO presales as well as the Healthcare BPO chief quit due to Syntel’s lack of investment appetite to invest in acquisitions as well as growth areas. Growth has been limited to a single international BPO client added recently in the last 3 years for offshore BFS operations. Adding to the ongoing woes was the company steadily losing its other domestic BPO client contributing to the remaining 10% of revenues.

With the JV Custodian contract up for renewal in March 2010, many opine that the contract will not be extended and might end up with its competitors like Wipro and TCS who have been successful in delivering cost effective operations to capital market clients as well as in acquisition. The high attrition run rate continues, and in case of non-renewal of the contract, Syntel stands to lose nearly its entire BPO portfolio which will greatly affect the parent company’s market capitalization and global standing. There is a buzz across the entire company regarding the future of its BPO and some go as far to say that Syntel itself might be plucked by a larger organization. While the current JV head is trying to lend a resemblance of stability with creative reengineering within BPO, what lies ahead for the BPO employees is anybody’s guess

Syntel has 3000+ full time employees.