'Out of ICU, Firstsource is pursuing profitable growth', says Rajesh Subramaniam, CEO

MUMBAI: FirstSource Solutions Ltd, India’s fifth-largest business process outsourcing company, will set up contact centres in South Africa and Central and Latin America and will improve profitability as it returns to growth path after floundering for the past few quarters.

Chief executive officer Rajesh Subramaniam, who is in his second stint at the Mumbai-based company, said Firstsource’s margins had bounced back 2.5-3 percentage points, after they slipped 6% basis points in 2011-12. The company is aiming to improve margins by another 1.5-2 percentage during the year.

“By FY15 we should get back to a profile of 14-15% EBITDA margins and are targeting industry-superior growth,” Subramaniam, who was part of the company’s founding team, told ET in an interview.

Subramaniam, the former CFO of back-office services provider, returned to the company as deputy MD and CFO in 2011 and was later elevated to the top post. He guided the company through onerous debt repayments, a drop in profit and a change of ownership.

“I would say we came out of the ICU in December, now we going to spend this year consolidating,” Subramaniam said.

FirstSource was bailed out by the Sanjiv Goenka-promoted CESC Ltd, which bought a majority stake in the company, helping it repay its foreign currency convertible bonds in December.

For the fourth-quarter, the company’s revenue stayed flat at Rs 712.5 crores. Subramaniam attributed the lack of revenue growth to steps the company is taking to manage its margins, like weeding out non-profitable customers.

“Where the customers are not making money, we are going back to them and I can’t work at this price point or these service level agreements. These are the changes we need, if we can’t make them, let’s figure out an orderly way in which we can transition this business out,” Subramaniam said. “We will not chase growth for the sake of growth. It has to be profitable.”