When Disruption rakes in dollars

Keshav Murugesh isn't fazed by the wave of disruption that is sweeping across the world.

By Saumitra Dasgupta
  • Published 25.07.17

Keshav Murugesh isn't fazed by the wave of disruption that is sweeping across the world.

Brexit blues, the kerfuffle over H1B visas and the virtual anarchy triggered by the advent of digital technologies threaten to roil forecasts and fortunes in the software industry, especially in the domain of business process management (BPM).

But the 53-year-old group CEO of WNS Global Services believes that things have never looked better for the business process outsourcing service provider.

He has good reason to be gung-ho about the future.

"The Indian BPM industry has transformed itself from an old model that was completely dependent on wage arbitrage to one where they are adding a lot of value by adding digital and analytics into their models," says Murugesh.

WNS started operations as an in-house unit of British Airways in 1996 and has since metamorphosed into a global BPM giant that serves over 200 clients.

There are a lot of myths and shibboleths attached to the BPM industry: it often evokes notions of call centres and derisive comments about telecallers with fake names and accents.

That is passé, insists Murugesh. The big boys in the BPM space have started to embrace the opportunities that are being thrown up by the disruptive currents in the marketplace.

"While the whole world is focused on assessing the impact of disruption on their business models - whether it is social, mobile, analytics, cloud, robotics and things like that - the BPM industry over the past three or four years has focused on incorporating these disruptive technologies.

"So, instead of being concerned about these models, we have said that these are the models of the future... we will leverage them into our model. It may cannibalise our revenues in the short term. But in the long term, it will build a strong, strategic relationship with our clients where they do not see us as mere vendors but as an extension of their enterprise," says Murugesh, who spoke with The Telegraph just days before the company disclosed its first-quarter results.

Revenue guidance

Late last week, WNS stepped up its revenue guidance for this year to a range between $693 million and $723 million, up from $578.4 million in fiscal 2017 -a robust 20-25 per cent year-on-year growth - effectively buttressing Murugesh's assertion.

In the first quarter (April-June), it clocked a revenue of $180.1 million, representing a 21.7 per cent increase over the year-ago period and a claw back from the loss of $5 million in the previous quarter.

WNS has a global headcount of 34,789 as of June 30 with an attrition rate of 34 per cent in each of the past three years.

The H1B visa issue doesn't bother the company which has 22,000 employees in the eight cities in India where it has centres.

"We are constantly creating new jobs, value-enhanced jobs, in various countries including the US. We do not leverage the H1B visas at all. And, therefore, from our point of view, we are seen as a job creator," says Murugesh, who has a strong connect with Calcutta where he spent many years as a top executive with the ITC group.

The high attrition rate and the growing adoption of robotics, analytics, artificial intelligence isn't causing furrowed brows either.

"Attrition is built into our business models," he says while insisting that technology-inspired disruption will not depress the need for superior human assets. Technology will drive non-linear models of growth, he says.

"WNS grew 16 per cent in the 2017 fiscal but our headcount grew 8 per cent... In the olden days, if we grew 10 per cent our headcount would also grow 10 per cent," Murugesh adds. "The workforce is now working on higher quality stuff which is domain intensive - accounting, and finance and analytics."

Brexit is good

Brexit is also great for business. As they count down to the 2019 deadline, the UK companies are in a great hurry to become "lean, mean, fighting machines".

Companies in Europe are also scrambling to deal with the post-Brexit turmoil as the comfort of doing business within a unified European Union crumbles.

"From our perspective, we have never seen as strong a revenue pipeline as in the past 18 months. It continues to build; the kind of pipeline we are seeing is truly global in nature and it is all being driven around the higher value service areas," adds the WNS chief.

The BPM player splashed out $110 million on acquisitions in the past 15 months, snapping up Value Edge, a provider of commercial research and analytics services to clients in the pharma industry, MTS HealthHelp Inc, which operates in the area of care management for healthcare companies, and Denali Sourcing Services Inc, which provides strategic procurement BPM solutions.

All of these are value accretive but Murugesh says he isn't looking at inorganic growth options just yet.

"I don't want to do acquisitions for the sake of an acquisition. For at least four to five years, we kept looking at acquisitions but we didn't find anything compelling... At this point of time, we are digesting our latest acquisitions. If something compelling comes up, we have no issues about looking at a small acquisition and, maybe, in a longer term at a transformational acquisition," he adds.

He has two unfulfilled desires. One is to travel to Costa Rica which houses a WNS facility - a stop that hasn't figured yet on his hectic travel itinerary. The other is to take his dida -his mother is a Bengali - out for dinner the next time he is in Calcutta, possibly to the Bohemian.