WNS: Only $1 million net in first quarter
By Annie Paul

NASSCOM lists WNS Global Services as holding the second position among the top 15 BPO Exporters in 2008 – 2009.  The same NASSCOM report places WNS on the 13th place among the Top 20 IT/BPO in employee numbers.  WNS was established in 1996 and has over 215 global clients.  So, how come this pure play BPO only had a $1 mill net in the first quarter of 2009?

Along with the captives, the crisis clouds are cast on pure play 3rd party BPO service providers who are finding it difficult to reduce costs and sustain margins. Genpact, India's largest BPO, with its second quarter results announced a revision in their revenue guidance from 10-15% to 6-9% for 2009. EXL Service Holdings announced a drop of 10% in revenues and 50% in profits for second quarter. And now, PE firm and principal shareholder Warburg Pincus with 50% stake and Nalanda Capital with 12.3% stake are looking to exit WNS Global Services from their portfolio in a hurry.

WNS, one of the largest pure-play 3rd party BPO providers in India with 21000+ employees reported $1 million net on a top line of $136 million for the 1st quarter of 2009. It could manage a net profit of only $9.5 million over annual revenue of $459.9 million for 2008. A key challenge is to repay the $200m loan taken to finance the purchase of Aviva Global Services in 8 semi-annual installments. Techgoss had learnt that the CEO's seat lies vacant with the 'soft move out' of co-founder Neeraj Bhargava at a strategic time. Already some of the top management in the BPO is desperately hunting for new roles which are in line with the predictable cost cutting measures adopted internally by WNS. Infosys and Cognizant are fast moving in to strengthen their BPO armory with WNS ammunition.

The economic crisis and IT-BPO companies have put pure play BPO’s like WNS, EXL and Genpact on the back-foot while competing for BPO deals and impacted their capacity to generate cash. This could potentially affect WNS position to make repayments for the Aviva deal and very well be the reason for Warburg and Nalanda looking to make an exit. EXL closes 2008 with a year on year revenue decline of 3.1%. Who’s next?