Xchanging: The New Number One

Ever since its debut as an independent company in 2004, the NYSE listed,
Gurgaon headquartered Genpactthe erstwhile captive services subsidiary of
GEhad remained the #1 BPO company in the world. For the first time in 2009, it
has been overtaken by another company. The new #1 is not the BPO subsidiary of a
high profile Indian IT company or an American company. It is the relatively
lesser known UK based firm, Xchanging, which has left Genpact behind in terms of
the 2009 revenue.

In FY 09, while Genpact recorded a revenue of $1,120 mn, Xchanging clocked a
revenue of 750.4 mn. Going by the average exchange rate of $1.56 per GBP in
2009 (source: OANDA), it comes out to be $1170 mn. With the difference being a
good $50 mn, even a little variation in exchange rates would not affect the fact
that there is a new #1 in the BPO street.

What made this possible for Xchanging is a robust growth of 34.5% in 2009, a
year in which Genpact managed to grow by only 7%.

Interestingly, what has helped Xchanging to dislodge the Indian company from
the top is the acquisition of another Indian companyCambridge Solutions, though
its organic growth has been impressive too.

David Andrews, CEO of Xchanging, who had started Xchanging in 1999, plays
down the fact that it is the new #1. He highlights the major changes instead.
One of the changes that he has consistently pursued in the last three years is
to convert the company from a European BPO firm to a global firm.

During our IPO in 2007, we had said we would create a global footprint. With
the Cambridge acquisition, we have today 75% of our employees outside of the UK.
We have a scale and critical mass in India driving our lean processing and a
sizable presence in Australia, the America and the Continental Europe, Andrews
says.

The Cambridge acquisition has been instrumental in entering the American and
Australian markets as well as in significantly enhancing the offshore capability
in India. Bengaluru currently has Xchangings largest processing center. The
company will soon be setting up a state-of-the-art processing center in Shimoga
which is a tier-3 Indian city located about 275 km north of Bengaluru.

The opportunities for Xchanging is arguably better than any other BPO firm.
Today, it draws only 10% of its revenue from the largest BPO market in the
world, the US. That means it has ample opportunity to grow there. Similarly,
today, its offshore component is far less compared to any other large company.
That promises upside on the margin front.

Yet, Andrews next focus is something else: technology. A technologist
himself, he however underestimatedthe role that technology can play in a BPO.
Andrews says this despite the fact that Xchanging probably has some of the most
mature platforms in areas such as insurance and securities processing.

India has a lot of potential, and it is not just about processing, he
asserts. He also informs that Chennai is going to be the companys next
technology hub.

Our technology vision is to create highly competitive and lean BPO platforms
by utilizing web 3.0 and 4G collaboration technologies. We see a very exciting
future for BPO with technologies such as 4G and cloud computing, he says.

Mehak Chawla

mehakc@cybermedia.co.in