Infosys may bundle BPO unit into service line

BENGALURU: Infosys is hitting a refresh button on its BPO business. The $9.5-billion IT firm is likely to bundle its BPO offerings into a service line and it might cease to exist as a wholly owned subsidiary. Its CEO Vishal Sikka has embarked on a transformation journey to steer the company towards higher value services aided by automation and artificial intelligence, but its two business units -BPO and product subsidiary Edgeverve -continue to be sore points for the firm.

In a recent email to the senior management, the company's COO U B Pravin Rao said it's re-imagining the value proposition of BPO as it continues to re-look at various service lines, including the BPO unit.

At the heart of the BPO division's under-performance is lower value work that has resulted in lower revenue per employee. Infosys BPO's performance has paled in comparison with its larger peer TCS with the former registering $551 million in revenues for the 2015-16 financial year compared to TCS' $1.9 billion for the same period. Its revenue growth has dropped sharply to 1.2% after registering 5.6% growth in the previous financial year.

And the needle has barely moved on the revenue front -it has added just $85 million in the last four financial years, the slowest revenue addition among the top three Indian ITBPO firms. Its cross-town peer Wipro added nearly $200 million to its BPO revenues in the last four years, taking it to $719 million. Cognizant, however, doesn't break up its BPO revenues separately .

Sikka, in his recent commentary , admitted that the new wave of innovation hasn't reached the BPO business, referring to very little automation and artificial intelligence built into maximizing effectiveness and efficiency in each process.