Infosys BPO to expand in China

Bangalore: Infosys BPO, the business processing outsourcing arm of Infosys, the country’s second-largest exporter of information technology services, is setting up a new centre in Dalian, China, with a 500-person capacity, Swaminathan D, the managing director and CEO of Infosys BPO told Business Standard.

Infosys established its first BPO centre in China in 2006. Located in Hangzhou, it employs 1,000 people. “We plan to offer back office support from Dalian as an additional location in China. We believe it is easy to get enough talents in Dalian who are good at managing the Japanese and Korean processes, other than Chinese and English,” said Swaminathan.

He says a reason Infosys is seeing a lot more BPO opportunities in China is that a large number of global clients are having operations in the country. “Thus, we look at locations which provide strategic and competitive advantage to our clients as a part of our location strategy. Besides, it enables us to extend or expand our talent pool,” he added.

Infosys, the parent company, is already establishing its own campus in Shanghai, with a proposed investment of $125-150 million. Its first outside of India, the proposed centre is to be located at Zizhu Science and Technology Park and can accommodate about 8,000 employees. Infosys presently employs 3,300 people in China.

“China offers a compelling regional language advantage and cost arbitrage, and is thus best leveraged to serve the Asia region, which accounts for about 60 per cent of China’s global sourcing revenues,” said Amneet Singh, vice-president, global sourcing, Everest Group.

He said the lack of clear costs and English language skills translate to a limited competitive advantage over India and the Philippines for work exported to North America and Europe, but “these regions still account for about 40 per cent of China’s global sourcing exports”.

At least 15 delivery centres were established by IT and BPO companies across tier-I and tier-II cities in China during the past 12 months.

Other than China, Infosys BPO is looking at setting up a centre in Manila, Philippines. This is expected to add about 700 people to the 1,000 in China, said Swaminathan. The centre is expected to be operational towards February. The MD said the Philippines was predominantly focused on customer services (voice-based BPO) but was also slowly moving into high-value back office works in areas like finance and accounting (F&A).

“Today, for instance, F&A talents are available in India. But when I look for larger numbers, it becomes challenging. Now I am able to do that in Manila as well, as it has got over 100,000 certified accountants. I can hire them at will,” said Swaminathan.

Adding, however, that in terms of intensity of works and other quality parameters, the Philippines is still far away from India’s.

Infosys BPO employs about 20,600 people across 12 centres, including seven outside India. In the year ended March 31, 2011, it BPO closed with revenue of $427 million.

Infosys buys Australia-based Portland BPO

Infosys BPO Limited, the business process outsourcing subsidiary of Infosys Limited, has signed a definitive agreement to acquire all of the outstanding share capital in Australia-based Portland Group Pty Ltd.

Portland Group is a leading provider of strategic sourcing and category management services. The acquisition is expected to be completed by early January 2012, subject to certain closing conditions being met. Portland Group was founded in 1999 and today counts several large ASX 200 organizations within the Australia region as clients. It is headquartered in Sydney and has offices in Melbourne, Brisbane, and Perth.

The company reported revenue of approximately AUD 31.3 million for the fiscal year ending 30 June 2011. The company employs 113 professionals. Swaminathan D, CEO and MD, Infosys BPO said, "We are delighted to have an outstanding team of domain specialists in Portland Group join us. This acquisition would significantly deepen our capabilities and domain expertise in our Sourcing and Procurement practice. Further in a dynamic marketplace such as Australasia this will strengthen the top-end of our service offering in the strategic sourcing and category management functions. This will also enhance the competitiveness, spread of offerings and global reach for our clients."

Gavin Solsky, CEO of Portland Group Pty Ltd said, "We believe the combination of Portland Group and Infosys will provide our clients with a highly compelling proposition that does not currently exist in the sourcing and procurement services market in Australia. It will allow us to offer our clients a truly integrated and globally competitive solution to deliver procurement benefits in the most effective and efficient way possible."

Portland Group's expertise in strategic sourcing and category management services is expected to complement Infosys BPO's global Sourcing & Procurement capabilities to create a market offering that will positively impact client's business efficiency and effectiveness. The purchase consideration for the deal is AUD 37 million, subject to customary post-completion adjustments.