Mr. Adi Saravanan, Founder & President, Allsec Technologies
“We still have Rs600mn in cash and are looking opportunistically for acquisitions.”
Allsec Technologies Ltd is a BPO with multiple delivery centers in India and Philippines, supporting a global clientele. The company offers Voice and Non-Voice services with world class Back Office acumen. Founded in 1998, Allsec is a Premier provider of Client Services Support, Technical Support, Quality Assurance, Sales, Collections, Customer Satisfaction, Payroll Solutions, Web development services and e-mail & Chat Support. Its services span multiple disciplines across industries such as Financial Services, Telecom, Retail, Health Care, Technology, Automotive and Gaming. Allsec?s offshore delivery strength is built on a robust, flexible and scalable IT-enabled platform and well-honed processes.
Mr. Adi Saravanan, Founder & President, Allsec Technologies, continues to spearhead the Business Development and Strategic Finance functions at the company. A Chartered Accountant by qualification, Adi had partnered Jagadish in building out, and managing, for over 10 years, till 1999, a highly successful Financial Advisory firm. As a Finance professional, Adi had a proven track-record of nurturing client relationships and exploring new horizons in structuring services, skills he honed well in his earlier assignments at Ashok Leyland and Sanmar, and has put to good use while driving business at Allsec Technologies. Allsec Technologies still draws on his entrepreneurial instinct and creative abilities to pitch the value-proposition, as they move towards establishing a differentiated BPO model.
Replying to India Infoline, Adi Saravanan says, ?We still have Rs600mn in cash and are looking opportunistically for acquisitions.?
From a phase of rapid growth you slipped into the red. What went wrong?
Allsec grew rapidly from 2004-2007 and was poised for a strong growth. However, due to a change in certain regulations in the US, two of our largest clients had to step back and re-orient the way they did business. We took a decision not to lay off any people and this impacted growth and profitability.
At the same time, Allsec set-up delivery facilities in Trichy and Manila to offer an alternative and cost effective delivery option to its clients. A sharp appreciation in the US dollar added to our woes resulting in losses. These issues are behind us now and Allsec is now poised to get back on the growth trajectory.
What are the steps being taken to bring the business back to black?
Allsec has taken several steps to ensure that it returns to profitability. We began by ensuring that costs are kept to the minimum. Secondly, there was a renewed focus on improving the shift utilization by adding new clients and using some of the existing facilities to service domestic clients. Thirdly, we also added a couple of more sales personnel. We believe these measures will propel Allsec towards revenue growth and resultant improvement in profitability.
By when do you expect to be profitable?
We are already at close to cash break-even level in Q3 FY09. Excluding training costs, our Manila operations were profitable in Q3 FY09. We remain optimistic about the profitability prospects of the company. For the nine months ending December 2008, consolidated revenues were Rs737.5mn. Although there was a consolidated loss of Rs83.2mn, we believe that new contracts, ramp-up on existing contracts and increased capacity utilization in Manila will hold us in good stead and enable us to turn profitable soon.
You raised capital from Carlyle to make some acquisitions? Has the amount been fully utilized?
We have done two acquisitions post the fund raising from Carlyle ? one in Manila and a domestic acquisition. In Manila, we service a client who can ramp-up to a few hundred seats from the present 50 seats. Post-acquisition, we have increased the capacity in Manila from 150 seats to 600 seats. A delivery centre alternate to India appeals to most companies and we are seeing a number of enquiries. A few of them have already been converted into clients. Some of these clients can potentially take-up the entire centre when they ramp-up.
The domestic acquisition (i2i Telesource) has helped us in several ways ? (a) we have added a number of blue chip clients, all of whom can scale significantly, (b) added new service capabilities, and (c) provided a PAN India presence. The i2i acquisition has provided us with relevant domestic BPO experience and Allsec is now considered as a significant domestic BPO player.
We are seeing significant traction in both the telecom and the financial services verticals. On the telecom side we hope to see an increase of about 700 seats in the very near future. Similar traction is also seen in the financial services vertical. We are participating in a number of RFPs with seat requirements varying anywhere between 100-500 seats and we have started registering a few wins.
As regards additional acquisitions, the Company is well positioned as it has a large part of the cash invested in by Carlyle still in the bank. We still have Rs600mn in cash and are looking for acquisitions on an opportunistic basis.
To what extent has the on going crisis impacted sector impacted Allsec?
A significant part of our revenues arises from clients in the financial services sector. Most of our US clients in this sector have been stable and with little or no growth. Over the past year, we have also added new clients with at least one of them growing above 100 seats. We are however seeing significant traction in the Indian financial services clients, who are not affected much by the current crisis.
The current downturn in the US and Europe could last anywhere from 2-4 years. One has to be patient, cost conscious, opportunistic to ride this out. I believe that Allsec today is probably one of the most well positioned BPO companies with very strong execution capabilities, optimistic profitability prospects, strong cash position, and a competitive cost structure.
What are the new initiatives you have in the pipeline?
Allsec has a strong HR BPO practice and is today the second largest HR BPO service provider processing over 100,000 pay slips a month. The Company has won a number of Fortune 500, MNC, and Indian clients in the last few quarters across verticals such as FMCG, Consulting, IT services and financial services. Allsec proposes to take this business offering global and is targeting customers in the US and UK for the same.
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