Overview
At Firstsource Solutions Limited, we are a leading provider of tech-enabled business process solutions designed to solve our clients business challenges and drive better outcomes. Our relentless focus on delivering results has earned us the trust of some of the most iconic and respected global brands across various industries, including healthcare, banking and financial services, communication, media, and technology and energy and utilities. By leveraging our deep domain knowledge and technology expertise, we help clients transform their operations, unlock growth, and deliver superior experiences to their end-customers. Above all, its the passion and commitment of our employees that consistently adds value for our clients.
Industry and macro context
According to Everest Group, an industry research firm, the global business process services (BPS) market is estimated to have grown at 3.4% in FY24, compared to 10.7% and 7.5% year-over-year growth in FY22 and FY23, respectively. We observed a similar trend in the Indian BPS services market. Indian BPS exports are estimated to have grown at 2.6% YoY to USD 43.2 billion in FY24, according to NASSCOM, compared to 9.1% in FY23. The slowdown in global technology and BPS spending in FY24 was primarily due to the tightening of monetary policy in several key demand markets and geopolitical uncertainties in many parts of the world. These factors affected the overall growth of the world economy, leading to a more cautious approach to investments and delayed decision-making across markets and verticals.
3.4%
Estimated growth rate of the global BPS market in FY24
(Source: Everest Group)
Enterprises are dealing with ongoing macro uncertainty, which necessitates overhauling cost structures and improving operational efficiencies while innovating products and services. Concurrently, we are also seeing accelerated developments in generative AI and applied AI that have the potential to reshape the consumption pattern of end customers across verticals. In this background, clients are looking for a partner who understands their domain, can bring technology and operations together, and has the scale to execute effectively and efficiently. Companies that tick all three boxes, which are agile enough to respond to these fast-evolving market dynamics and at the same time have both the breadth and depth of domain knowledge and client relationships, are the ones who are growing ahead of the others.
Our strategy
The discontinuities caused by the macro and technology shifts will likely create market opportunities. We are well-positioned to take advantage of these opportunities. Our longstanding relationships with clients, including 18 Fortune 500 and three FTSE100 companies, our market leadership in identified segments well recognized by leading industry research and advisory firms, and the passion and commitment of our 27,940-strong workforce provide us with a solid foundation. We leverage this to execute the seven strategic imperatives forming the One Firstsource framework.
4,922
Net headcount addition in FY24
>55
Proof-of-concepts completed in specific areas of AI deployment in our clients operations in FY24 in the US on IT/ technology annually
Our comprehensive understanding of our customers operations and our recognized ability to integrate technology and operations to deliver business outcomes is helping us disrupt traditional people-based execution models with ‘tech+people solutions built on cutting-edge automation and AI frameworks. Enterprises today face the challenge of rapidly reinventing their processes and systems for the emerging AI-first age. This approach needs an understanding of the emerging technologies and new ways of working while navigating challenges of cost management, data security and compliance. We have taken the lead in facilitating our customers journey towards an AI-led transformation. FirstSense.AI is our proprietary framework to accelerate clients AI deployment. In FY24, we completed over 55 proof-of-concepts on specific areas of AI deployment in our clients operations. Of this, eight are currently getting piloted for scale deployment. We are also working on co-developing domain/function-specific large language models (LLMs) and technology companies to address new market opportunities. We are actively deploying AI internally to improve our efficiencies and the experience of our new-age workforce.
In FY24, we introduced FirstCoLab, our initiative to engage Firstsourcers in AI engineering and FirstAsist proactively, our generative AI-based interactive tool for employees seeking information on organization-wide policies.
Our revamped go-to-market strategy, which has dedicated client partners for targeted accounts at its core, resonates well with our customers. Our focused approach to identifying growth opportunities, developing structured account plans, and nurturing transformational opportunities in our existing customers and an identified set of new logos is reflected in the strength of our current deal pipeline. At the same time, our streamlined organizational structure and focus on driving operational efficiencies should help us improve our profitability while prudently investing in accelerating business growth.
FY24 financial performance
For FY24, our revenues stood at I 63,362 million or USD 765 million, indicating a 5.2% year-on-year growth in rupee terms and 1.1% growth in constant currency terms. Operating profit reached I 6,962 million, marking a 23.6% increase from
FY23 and resulting in an EBIT margin of 11%. Profit after tax for FY24 amounted to I 5,147 million.
Our performance in FY24 was of contrasting halves, marked by flat revenues in the first half but significant traction in the second. Firstsource ended FY24 with the highest-ever net new ACV won in a year and exited with a robust and healthy deal pipeline. We are participating actively in clients cost optimization, revenue generation, and technology transformation agendas, focusing on increasing our wallet share from existing customers and acquiring new clients. Our top client renewed their contract with us for another decade, solidifying our position as their primary outsourcing partner. One of the UKs top five retail banks, with whom we have a two-decade relationship, selected us for a substantial transformational program that marked one of our largest deal wins in the last five years.
Vertical-wise performance
Our vertical portfolio includes four groups: banking and financial services (BFS), healthcare, communications, media, and technology (CMT) and diverse.
Banking and financial services
The global banking and financial services industry faces headwinds from elevated interest rates. Furthermore, the 2023 United States banking crisis (series of bank failures and bankruptcies among small and mid-sized banks in early 2023) inrevealed vulnerabilities in the US banking system that have necessitated systemic reforms to safeguard consumer trust and the financial sectors stability. Regulatory pressures also increase financial crime and compliance and fraud operations processes. Similarly, the UK banking industry is grappling with economic uncertainty, political volatility, technology-driven margin pressures, and heightened customer expectations. These volatile market conditions have compelled banks and financial institutions to reassess their priorities. Thus, there is reduced discretionary tech spending, particularly in North America and Europe, as the urgency to manage costs effectively while adapting drives clients to evolve customer needs and industry dynamics.
The US mortgage sector was likewise affected by these market conditions. With mortgage rates remaining elevated, there was a notable impact on both loan volumes and overall market activity. Prospective homebuyers encountered difficulties due to decreased affordability, leading to a decline in demand. This trend also played a role in the downturn observed in the resale market. Loan origination volumes remain under pressure, and banks expect it to stay that way in the near term.
The US credit card industry, which plays a pivotal role in serving as a vital revenue stream and an essential avenue for consumer lending and transactional activities, has steadily increased credit card delinquencies since the fourth quarter of 2021, surpassing pre-pandemic levels. There is a notable rise in delinquencies among borrowers with high credit card utilization rates, indicating potential financial strain. The correlation between high utilization rates and future delinquencies highlights banks importance in monitoring borrower behavior for insights into evolving delinquency patterns.
Our revenues from the BFS vertical degrew 3.1% YoY and contributed 39.2% to overall revenues in FY24. While the broader demand environment remained challenging, our efforts to fortify the sales and solutions team in this vertical saw substantial progress, helping Firstsource expand its footprints within existing clients and venture into adjacent segments with specialized offerings.
In the mortgage market, our technology-led proposition is resonating well with customers who are increasingly exploring non-linear execution models to prepare for a potential reversal in the cyclicality of the business. Our efforts to weatherproof our portfolio through expansion into servicing, reverse mortgage, and adjacent real estate sectors have also yielded results. Several of our large clients in this space are increasingly amenable to entrusting end-to-end responsibilities for functions to us versus the component-based model of the past. There is also a growing acceptance of offshore-based structures. This approach has helped us broad base our client portfolio in this market segment in terms of client profile and nature of services.
Our debt collection business exhibited steady growth in FY24, fueled by both new client acquisitions and expansion within existing accounts. Efforts are underway to transition execution to offshore or nearshore locations, aligning with evolving market dynamics and cost efficiencies. In the banking and financial services vertical, Firstsource is a leading CX service provider, employing a strategic blend of voice and non-voice services to enhance efficiency and ensure equitable outcomes. We are seeing a notable trend towards offshore or nearshore operations, driven by ongoing cost challenges in the US and UK markets. We proactively engage with advisors and industry analysts to amplify our value proposition while targeting new segments within the financial services vertical, particularly in specialized services related to financial crimes and compliance. We are also making strides building societies, next-generation banks and fintech players.
In FY24, we added 20 new logos in this vertical. Overall, we are encouraged by the good buildup in our deal pipeline in this vertical.
Healthcare
Firstsource operates in two key segments of the healthcare industry: providers, where our clients include over 1,000 hospitals in the US, and payers, where we work with seven of the top 10 health insurance/managed care services providers in the US.
1,000+
Hospitals in the US, and payers are Firstsources clients
The US healthcare industry is seeing structural changes in the post-pandemic operative environment. Rising cost pressures, especially in staffing and talent acquisition, drive investments in offshore and nearshore delivery models alongside advancements in technology innovation, such as data analytics and AI. Theres a notable shift towards consumerization, focusing on enhancing patient experience through personalized care and adopting solutions like digital front doors. Additionally, the industry is transitioning towards value-based care models, reflecting a projected increase in patients in the US covered under such programs. Meeting regulatory and compliance standards remains paramount, with continuous adjustments required for data management. Moreover, the convergence of payers and providers, mainly through provider-owned plans, reshapes the landscape. Technology disruption is driving the adoption of emerging technologies like robotic process automation (RPA), artificial intelligence/machine learning
ML), and natural language processing (NLP), aiming to reduce costs, enhance quality, and improve customer service through effective non-voice channels such as AI-co-pilots, interactive voice response (IVR), and micro-sites.
US healthcare providers faced significant challenges due to the lingering effects of the COVID-19 pandemic and the public health emergency, lifted in May 2023. With patient volumes slowly returning to pre-pandemic levels and increasing costs, many hospitals still struggle to stay financially afloat. As a result, there is a growing realization of the need to focus on improving efficiency and productivity and optimizing revenue capture. To address these issues, healthcare providers have turned to third-party support to streamline their revenue cycle operations and manage expenses more effectively. The market for revenue cycle management solutions is estimated at USD 25 billion and is growing at 8-10% per year. Hospitals and healthcare systems increasingly embrace technology to improve patient care and operational efficiency. Digital and AI tools have become critical components in enhancing clinical decision-making and resource allocation.
USD 25 bn
Estimated market for revenue cycle management solutions
The healthcare payer space has a heightened focus on enhancing operational efficiency, streamlining administrative processes, and optimizing care delivery. Theres a growing demand for BPaaS solutions to address these challenges by offering scalability, interoperability, information security, and support for value-based care. These solutions encompass broad-based, function-specific, and line-of-business (LoB)-specific offerings, providing tailored services to streamline operations and enhance member experiences while ensuring regulatory compliance. There is an increasing adoption of digital health solutions by insurers, such as telemedicine and remote monitoring, to expand virtual care options and improve care coordination. Payer organizations also placed a high priority on data analytics and predictive modelling to gain a better understanding of patient populations, identify high-risk individuals, and tailor interventions accordingly. Our revenues from the healthcare vertical grew 4% YoY and contributed 33% to overall revenues in FY24. In the provider segment, we are proactively aligning with profitability-focused strategies of hospitals. We are expanding offshore capabilities to build adjacencies and drive accelerated growth within the existing client portfolio. Our acquisition of QBSS announced in May 2024 is in line with this strategy. We believe our tech-led offshore centric approach should help us gain share in the revenue cycle management (RCM) market from traditional players who have largely built a people-based business.
In the payer segment, Firstsource continues to focus on securing and expanding partnerships with major health plans, enhancing digital intake offerings, and developing business process as a service (BPaaS) solutions for the mid-market.
Falling reimbursement rates have been putting significant pressure on the P&L of major health plans. Consequently, we are seeing a surge in transformative initiatives within the payor segment that is reflected in a 60% jump in our
ACV wins in the segment in FY24 and our pipeline gives us confidence that the momentum should sustain in FY25.
60%
Jump in ACV wins in the healthcare segment in FY24
Communications, media and technology
Firstsources communications, media and technology (CMT) vertical encompasses three primary segments: telecom and digital media, edtech, and consumer tech.
The sector has seen transformative changes in recent years due to rapid technological advancements, evolving consumer behaviors, and regulatory shifts. In the communications segment, established trends persist, with mobile data and M2M applications driving growth. Fixed data services expand and pay TV faces slight setbacks amidst rising VoD and OTT popularity. Telcos are leveraging various foundational models, emphasizing API integration for seamless management of diverse generative AI models, driven by the need to enhance customer experience, improve network efficiency, and leverage data-driven insights across various departments. Media companies seeing financial impact from streaming platforms are intensifying cost reduction efforts while shifting focus towards technology solutions, driving efficiency, profitability, and adaptation to market trends
Streaming services have reshaped content consumption habits, leading to a decline in traditional TV subscriptions.
The edtech sector continues to grow within the CMT ecosystem, fueled by the rising adoption of digital learning and remote education platforms. This trend allowed edtech companies to deliver personalized learning experiences and innovative educational content. As the sector evolves, trends such as upskilling, AI-driven learning, and mental health focus shape its trajectory.
Consumer technology companies continued to innovate across diverse product categories, from smartphones and laptops to smart home devices and connected appliances. Advancements in AI, IoT, and voice recognition technologies drove the proliferation of intelligent devices that seamlessly integrated into consumers daily routines, enhancing convenience, efficiency, and entertainment experiences. Moreover, expanding e-commerce platforms and digital marketplaces facilitate greater accessibility to cutting-edge gadgets and tech accessories, empowering consumers to stay connected and productive in an increasingly digital world.
Our revenues from the CMT vertical grew 11.6% YoY and contributed 22.3% to overall revenues in FY24. While the onshore to offshore business transition in our top client as part of a 10-year contract extension-posed an optical headwind, we managed to minimize its impact by securing new business with the top client and expanding our presence with other clients. Our comprehensive service portfolio and position as a disruptive challenger brand have resonated well with both existing and new clients. We added four new logos in this vertical in FY24.
Of the largest consumer tech companies in the world were supported in localizing their AI research teams by Firstsource
We are seeing a healthy momentum in our telecom and media business. Since companies in this segment are large but mature outsourcers, we are focusing on their transformation agenda and bringing in our entire service portfolio. Our proposition is resonating well with our existing clients and new logos. We see a healthy deal pipeline buildup in this segment, especially with the nextgen fiber companies.
In edtech, we actively work with multiple global providers, offering differentiated solutions that span the entire learner lifecycle from admissions to graduation. During the year, this segment saw significant progress with pipeline conversions and a large deal from Educational Testing Service (ETS). In
October 2023, we launched our first global capability center .for the edtech vertical in Hyderabad, focusing on assessment operations, data analytics, and emerging tech.
Firstsources footprint in the consumer tech space continues to grow, particularly with marquee logos. Our non-traditional service propositions are gaining traction in the marketplace, supported by a healthy deal pipeline. Notable expansions include partnerships for training AI tools and supporting AI research teams in localization efforts for two of the largest consumer tech companies in the world.
Diverse
Our diverse segment comprises mainly of utilities. It grew at 132.3% YoY, accounting for 5.5% of the Companys overall revenues in FY24. There is a growing shift towards digitalization among utilities as their end customers increasingly seek seamless, tech-driven experiences. This trend entails accelerating investments in emerging technologies and capabilities and widespread integration of digital solutions throughout the organization. We continue to see robust demand in the energy market even as we make fresh inroads in our existing large client in this vertical.
Risks and concerns and their mitigation
TheriskmanagementreportdescribestheCompanysenterprise-wide risk management philosophy, structure, and practices. We caution readers that risk-related information outlined here is for information purposes only. This report contains forward-looking statements about risks and uncertainties objectives. The business model is subject to uncertainties that could cause results to differ materially from those forward-looking statements. Readers are requested to exercise their judgment in assessing the risks associated with the Company and review all the factors discussed elsewhere in this annual report. In todays dynamic environment, organisations face multiple risks and thus creating and sustaining the value for our stakeholders requires robust governance and a robust risk management function.
Our risk management framework
We have designed and implemented our risk management framework based on the COSO Framework (Committee of Sponsoring Organizations). This globally accepted and recognized framework provides guidance and thought leadership on enterprise risk management and internal controls. Enterprise risk management at Firstsource seeks to minimize the adverse impact of risks on key business objectives and enables the Company to leverage market opportunities continuously track these risks with the help of Key Risk Indicators (KRIs) as defined by the risk management team and risk owners.
Risk management process
The Company has defined an integrated enterprise risk management and internal controls framework that encompasses both a top-down and a bottom-up risk assessment process.
Top-down: This approach is strategically crucial. It focuses on the broader cross-cutting risks and macroeconomic factors that affect the entire organization and the Companys ability to achieve our goals and strategic objectives. It should be at the forefront of the leaderships agenda.
Bottom-up: The bottom-up approach focuses on an in-depthour business assessment of the Companys business processes, our reflected in the specific risks, and how we control these risks.
Aligning transactional risk data from operational risk registers, internal audits, and operational risk events with the broader enterprise-level risks identified through management discussions, workshops, and macroeconomic assessment will create a line of sight into what is causing an enterprise risk and how those risks could be mitigated or responded to. The risks are identified across the defined risk categories considering the Companys business objectives. The stakeholders with clearly and responsibilities at various levels take up the response, remediation, monitoring, tracking, reporting and review at defined periodicities.
Remuneration and financial incentives:
The companys remuneration system is aligned with effectively.We risk management principles. At the highest level of the organisation, decisions on the remuneration of Firstsources executive director and senior management incorporate the necessary precautions to avoid assuming excessive risks and rewarding unfavourable management results. The variable remuneration paid to the heads of departments that manage company risk (e.g. the departments of compliance, prevention of occupational risk, information security, etc.) is dependent upon the proper management, disclosure and integration of risks throughout the whole company.
Key business risks and their mitigation
The Companys critical business risks and their mitigation measures include:
| Risks | Risk description |
| a. Strategic risks | |
| Growth risk | We derive most of our revenues from a few big US and UK-based clients. Hence, any economic slowdown or downturn in these economies and industries may affect the Companys business. Increasing technology disruptions and digitization trends have made inventing and adapting digital technologies imperative. Improper adaption could impact the Companys ability to grow. |
| The Companys healthcare industry services are less prone to economic or recessionary cycles. However, the customer management business is relatively low-margin and more prone to economic variations. Hence, any technology disruption could see volume shrinkage and can have an adverse impact on growth. | |
| The Companys continued focus on creating the digital business practices has enabled us to offer differentiated, productized services across industry segments. We have based these services on digitization, robotics, artificial intelligence, and data analytics, and other technology-enabled solutions, which allow the Company to retain and grow our wallet share with our clients and win new logos. | |
| The Company has also ramped up efforts to establish new relationships in new-age economy businesses and won the first few logos, which will further diversify revenue and industry concentration. | |
| Country risk | The Company has a global footprint, with operations in multiple geographies, intermediate or operating subsidiaries and branches, and branches incorporated in India, the US, the UK, the Philippines, Mexico, and South Africa. Consequently, the Company is exposed to various geopolitical and regulatory risks that are beyond the Companys control. |
| The Company has local management teams in all our operating countries, and they understand the country- specific operating nuances. | |
| The Company has also invested significantly in creating a management structure in these geographies and has a well-diversified geographic spread to mitigatetheserisks. | |
| b. Industry and macroeconomic risks | |
| Long selling cycle | The Companys selling cycle for BPS ranges from months to multiple years and requires significant capital, resources, and time from both clients and the Company. |
| Furthermore, due to the COVID-19 pandemic, the decision process for existing and prospective clients has slowed down due to reprioritization. This trend leads to the risk of delays, over which the Company has little or no control. | |
| The Company has robust marketing, sales and business development teams across geographies with an aggressive transition methodology that helps transition new wins fairly quickly into service delivery mode. Most contracts with existing clients are long-term, ensuring sustainable and scalable business from such clients.roles | |
| Highly-competitive environment | The market for BPS has become highly competitive over the years. These competitors include third-party ‘pure play BPS providers based largely in India and the Philippines, local/onshore BPS providers in the US and UK, BPS divisions of global IT companies and in-house captives of potential clients. |
| The Company understands that we need to retain and grow our leadership in the industry. To maintain this competitive edge, we invest significantly in strengthening domain expertise, digital capabilities, process excellence, operational prowess, and innovation quotient and creating a robust transformation framework. | |
| These measures will help us differentiate ourselves vis-a-vis competition and aid non-linear growth in revenues and margins. | |
| C. Financial risks | |
| Currency volatility | The exchange rate between INR and GBP, INR and USD, has been volatile in recent years, and these currencies may continue to fluctuate significantly in the future as well. |
| The Companys operating results will continue to be impacted by fluctuations in these exchange rates. | |
| The Company has a dedicated treasury function and an internal foreign exchange risk management policy that proactively hedges exposures. Per the internal guidelines, the Company has been judiciously hedging our net exposures regularly through forward cover contracts and other suitable products. | |
| Customer credit risk | This risk is the possible inability to collect from clients or delays in collecting the Companys dues. |
| While this risk did not impact us in the current year the pressure will continue in FY25 due to the adverse impact on the overall liquidity situation and challenges faced by clients businesses. This could have an impact on the Companys cash receivables, and the Company may be required to enhance our short-term line of credit temporarily, to continue our operations. | |
| The Company addresses this risk through a well-defined governance mechanism to ensure adequate liquidity and solvency. | |
| Liquidity and solvency risk | The Company operates through legal entities in multiple countries and is subject to various standards and principles for accounting and reporting. Any material change in the standards will impact the Companys financial reporting. |
| Furthermore, the Company uses financial leverage to ensure optimum solvency. Timely borrowing, repayment, and raising funds at the right cost are important aspects of financial management, which would otherwise adversely impact profitability and solvency. | |
| The Company has implemented a robust internal financial controls framework that helps mitigate these risks. | |
| D. Operational risks | |
| Non-renewal of key client contracts | The Company continues to maintain existing accounts and acquire new clients. We constantly endeavor to grow existing client businesses and add new clients to our portfolio. The contracts with clients are of varying duration, between one and ten years. After the term expires, we put out our contracts for tender through a procurement process. Non-renewal may significantly affect the Companys revenues. |
| The Company recognizes that providing excellent services and constant value enhancement is critical to ensuring a high chance of contractual renewal at the expiry of the term. The Companys sales and CRM teams constantly strive to enhance their relationships with key stakeholders to position the Companys services favorably. | |
| Cybersecurity/Data privacy risk | As part of the services offered to our clients, we handle confidential data and proprietary information.Any leakage of this information harms the Companys reputation. |
| The Company faces heightened cybersecurity risk due to possible attacks on data centers and technology infrastructure. We address this risk through a robust information and data security, privacy, and cybersecurity framework and processes that applies to all our offices and employees.arious operation centers are ISO V 27001-certified, which is an international standard for Information Security Management Systems (ISMS). | |
| Additionally, many processes are certified with HIPPA, HITRUST, and SOC2 accreditations. Audits are conducted on a periodic basis, and any non-conformance observed is fixed immediately. The Company adopts a zero-tolerance policy towards non-compliance with this framework. | |
| We have also deployed various technical controls at the network perimeter, servers, network devices, data centers and end-user computing. | |
| Threat and vulnerability management: Early detection of core infrastructure vulnerabilities ensures proactive mitigation. Our comprehensive technical compliance check through a third party covers the following: | |
| • Vulnerability assessment and penetration testing | |
| • Segmentation penetration testing | |
| • Web application security assessment | |
| • Approved scanning vendor for Payment Card Industry Data Security Standard | |
| • Desktop scans for Payment Card Industry Data Security Standard | |
| • Source code review | |
| • Cloud infrastructure review | |
| • Network configuration review | |
| • Security operations center and digital footprint monitoring – continuous monitoring 24/7 monitoring helps reinforce our security posture while preventing, detecting, analyzing, and responding to real-time cybersecurity incidents. | |
| Digital footprint monitoring is done through a security scorecard that rates the cybersecurity postures of corporate entities by completing a scored analysis of cyber threat intelligence. | |
| The end users must go through a highly-secure virtual private network with two-factor authentication. | |
| We protect end-user computing with endpoint detection and response, data loss prevention, encryption, and domain name system layer security. Internet access is managed through a proxy, blocking risky sites and all e-mails are protected by a secure mail gateway that protects them from malware, spam, phishing, ransomware, spoofing, and more. | |
| • All O365 channels are protected with data loss prevention. | |
| • Servers are protected with best-in-class endpoint detection and responses/extended detection and responses. | |
| • Login to servers is through a secure channel using a privileged access management tool with two- factor authentication. | |
| Risks due to operational errors, frauds and internal non-compliances of policies and procedures | The Company has internal policies, procedures and norms for operational activities, process compliance and controls. These norms are specified to achieve various control objectives and to prevent fraud and errors. Non- adherence to such internal policies, procedures, and norms, can therefore, lead to operational errors, fraud, and internal non-compliance. |
| The Company has strong internal controls to check compliance with policies and procedures operated by various levels of management. Furthermore, these controls are also subject to risk-based internal audits by an independent internal audit team, which helps identify and remedy gaps promptly. | |
| Reputational risks | Our clients are big and reputed corporates. A loss of reputation can adversely affect our operations and contractibility. As a public company, we are scrutinized by many constituents including the media. |
| We have not been impacted by any event that could jeopardize our reputation in the past. Our well-managed operations do not expose our employees and clients to major risks. Moreover, our communications setup is always proactive in managing minor situations that may arise. | |
| Legal risks | The Company has long-term contracts with our customers, and we deliver our services under these contracts from several offices across the US, the UK, India, Mexico, South Africa, and the Philippines. Additionally, to deliver on the various service level commitments, the Company also needs to ensure compliance with applicable laws and regulations in those geographies, including but not limited to employment, tax, and environmental laws. |
| Additionally, the Company must safeguard our intellectual properties against infringement and ensure compliance with third-party licenses used in our day-to-day business. | |
| The Company has a legal team in place, which, in addition to advising and ensuring documentary safeguarding, closely works with business and support functions to enable compliance with contractual and/or regulatory requirements. | |
| E. Human resources risks | |
| Risk related to attrition | Continuous talent availability and upskilling are crucial drivers of achieving our business objectives. The ever- accelerating war for talent, the changing needs of a multi-generational workforce, and the limited supply of employable talent poses a significant challenge to retaining a talented workforce and maintain consistency in performance. We continuously strengthen our internal processes to retain critical people, create longevity of talent, and maintaining a steady talent supply. |
| The Company has put in place the following measures to mitigate the risks around attrition and attrition costs: | |
| • Enhancing and developing skills of the first-line managers | |
| • Focusing on upskilling and reskilling by providing and developing effective training academies and supporting employee development programs. | |
| • Carving structured and strong career paths and providing opportunities for growth through job enlargements, enrichment of responsibilities and internal job movements. | |
| • Effective reward and recognition programs that celebrate successes and efforts. | |
| Risk related to ability to recruit employees at a large-scale and manage inflationary wage costs | Our success depends on our ability to attract and retain large numbers of employees with the right skill sets and experience to meet organizational goals. With talent shortages and intense competition for skilled individuals, the demand for qualified employees will continue to increase and is expected to remain high. Wage inflation and replacement costs not only bear a potential risk but also result in higher personnel expenses and training costs. |
| The Company has developed innovative recruitment channels and practices to mitigate these risks, which include: | |
| • Strong employee referral programs contribute to more than one-third | |
| • Establishing ourselves as an employer of choice and participating in several career events to strengthen the Firstsource brand and getting access to talent | |
| • Affiliations with colleges at graduate and undergraduate levels to be the preferred employer in tier-II and III cities. | |
| • Implement a strategy for campus/apprentice hiring to directly attract fresh talent from colleges and build a future-oriented hiring pipeline through campus recruitment. | |
| Risk related to leadership team and succession planning | The leadership team drives our Companys vision and strategy and inculcates values within the Company to meet our goals. If leadership changes or a critical resource leaves the Company, business continuity, client relations, and employee engagement will be affected. |
| Our integrated approach to talent management ensures that the Company has the desired leadership and management capability to meet the demands of the business. The integrated approach comprises the following: | |
| • A total rewards philosophy ensures that the compensation aligns with the market standards, and it attracts and retains the right talent, and rewards high performance. | |
| • Succession planning for business-critical roles and people growth opportunities in line with their career aspirations. | |
| Risk of unethical business practices/ misconduct | The BPS industry is people-centric with a large employee base across cultures and geographies. It also has client-driven incentive programs in many businesses, which may lead to acts of potential misconduct cases and resultant client or reputational issues. |
| The Company has a well-defined code of conduct which every employee is trained on and certifies to comply with. The Company also has a robust whistle-blowing mechanism which enables employees to report any misconduct, which is independently investigated and remediated. We also have a variety of training/refresher programs throughout the year. Additionally, the Company has a systematic background check verification program (for employees) and a due diligence process (for vendors/third parties) the appointment stage. | |
| The Company demonstrates zero tolerance towards cases of unethical business practices or misconduct. | |
| F. Compliance risks | |
| Compliance and regulatory risks in various geographies | As we have grown, our geographic presence, customer base, and exposure to various regulatory and compliance risks have also increased. The Company has a relatively high proportion of regulated businesses in our overall portfolio, which enhances the regulatory risk. The Companys operations and clients are spread across multiple geographies and are governed by various regulations and government guidelines. Breach of any of these regulatory provisions can attract regulatory inspection, notices, penalties, and revocation of permits or licenses. |
| The Company has implemented a robust regulatory and contractual compliance framework to identify, assess, monitor, control, and report compliance status concerning laws and regulations specific to the country we operate in, and the client-specific work in a consistent manner for our businesses across the globe. | |
| The framework ensures we align compliance ownerships, keep responsible personnel aware, report compliance status, and take necessary actions to comply. All laws and regulations are verified for applicability, detailed at the provision level, and tracked for compliance at the function and location level. | |
| G. Technology risks | |
| Advent of disruptive technologies | The overall business environment continues to witness emerging disruptive technologies. However, clients seek to cut additional back-office costs due to continued budget pressures, while suppliers try to create additional services and associated revenues. Technologies such as cloud computing, artificial intelligence, data analytics software, social media platforms, and process automation software are being used in the BPS industry to enable businesses to lower costs and be more effective. BPS companies are moving fast to offer additional value-added services through technology enablement, partnerships, and alliances. |
| As part of our productization initiatives, the Company has developed a comprehensive suite of digital solutions for robotics process automation and digital analytics. A combination of domain and process expertise with best- in-breed technology is helping the Company pursue significant opportunities. |
Discussion on financial position relating to operational performance
Shareholders funds
The authorized share capital of the Company is I 8,720.00 million with 872 million equity shares of I 10 each. The paid up share capital as on March 31, 2024, stands at I 6,969.91 million compared to I 6,969.91 million as on March 31, 2023.
There is no increase in equity share capital.
The other equity of the Company increased from I 26,698.54 million to I 30,034.12 million. The details of increase in reserves and surplus by I 3,335.58 million are as below:
| Particulars | Amount |
| Increase on account of: | |
| Profit for the year less appropriation | 4,974.60 |
| Effective portion of cash flow hedges | 186.07 |
| Exchange difference on consolidation of non- integral subsidiaries/entities | 311.51 |
| Treasury shares (Net) | 450.41 |
| Decrease on account of: | |
| Employee stock option reserve | (181.07) |
| Dividend (Net) | (2,405.94) |
| Net increase in reserves and surplus | 3,335.58 |
Minority interest
Minority interest is created on account of 74% consolidation of Firstsource Dialog Solutions (Private) Limited, Sri Lanka. Minority interest as on March 31, 2024, is I 3.84 million compared to I 3.50 million as on March 31, 2023.
Long-term borrowings
Unsecured long-term borrowings represent loan from banks and non-banking financial companies.
Unsecured long-term borrowings outstanding as on March 31, 2024, were I 42.17 million compared to I 1,393.66 million as on March 31, 2023. The net decrease was majorly on account of repayment of long term borrowings.
Deferred tax liabilities
Deferred tax liabilities as on March 31, 2024, were I 1,470.38 million compared to I 1,195.98 million as on March 31, 2023. This is majorly due to utilisation of deferred tax on provision for onerous contracts and business losses during the year.
Lease liabilities
Lease liabilities for the Company as on March 31, 2024, were I 7,209.19 million and for March 31, 2023, were I 5,661.84 million. The increase is on account of new premises taken on lease.
Provisions
Provisions represents provision for onerous contracts, gratuity and compensated absences liability to employees based on actuarial valuation done by an independent actuary. These provisions as on March 31, 2024, were I 654.68 million compared to I 963.46 million in March 31, 2023. The decrease in short term provisions from last year is due to provision for onerous contracts utilized during the year.
Short-term and other borrowings
Short-term borrowings as on March 31, 2024, were I 8,080.92 million compared to I 6,876.09 million as on March 31, 2023. The increase is on account of additional line of credit from banks netted off by decrease in current maturities of long term borrowings.
Trade payables
Trade payables as on March 31, 2024, were I 3,055.81 million compared to I 2,314.46 million as on March 31, 2023.
Other financial liabilities
Other financial liabilities as on March 31, 2024, were I 2,047.30 million compared to I 3,737.37 million as on March
31, 2023. The decrease in other financial liabilities is majorly on account of decrease in liability for purchase of Non-controlling Interest.
Other liabilities
Other current liabilities as on March 31, 2024, were I 1,056.96 million compared to I 828.87 million as on March 31, 2023. The increase in other current liabilities is on account of liability towards customer contracts.
Goodwill
Goodwill as on March 31, 2024, was I 29,884.90 million compared to I 29,449.76 million as on March 31, 2023. The increase in goodwill during the year was I 435.14 million due to restatement of non-integral foreign subsidiaries at year end exchange rate.
Fixed assets
The net block of tangible assets, intangible assets and capital work-in progress and intangible assets under development amounting to I 2,460.91 million as on March 31, 2024, compared to I 2,788.59 million as on March 31, 2023, resulted in a net decrease of the assets to the extent of I 327.68 million.
This is majorly due to net additions of I 707.49 million and by upward exchange rate impact of I 36.60 million and depreciation charge for the year amounting to I 1,208.44 million.
Right of use assets
Right of use assets of the Company was I 6,355.29 million on March 31, 2024, and I 4,958.29 million on March 31, 2023. The increase is due to net additions in leases of I 2,720.07 million and upward exchange rate impact of I 70.73 million offset by depreciation charge for the year amounting to I 1,393.80 million.
Investments
The investments of the Company represent non-current investments of I 115.05 million and current investments of I 300.27 million as on March 31, 2024, compared to I 115.59 million and I 595.50 million, respectively as on March 31, 2023.
Deferred tax assets
Deferred Tax assets of the Company as on March 31, 2024, were I 2,920.61 million compared to I 2,948.06 million as on March 31, 2023.
Income tax assets
Income Tax assets of the Company as on March 31, 2024, were I 808.79 million compared to I 786.49 million as on March 31, 2023.
Other non-current assets
The other non-current assets of the Company as on March 31, 2024, were I 2,086.10 million compared to I 1,025.95 million as on March 31, 2023. This increase is due to increase in non-current portion of deferred contract cost.
Trade receivables billed
Billed trade receivables amount to I 8,606.78 million (net of provision for doubtful debts amounting to I 848.22 million) as on March 31, 2024, compared to I 6,800.47 million (net of provision for doubtful debts amounting to I 515.50 million) as on March 31, 2023. These receivables are considered good and realisable.
The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions the industry in which the customer operates and general economic factors which could affect the Companys ability to settle claims. Provisions are generally made for all receivables outstanding for more than 180 days as also for others, depending on the managements perception of the risk. Debtors days as on March 31, 2024 (calculated based on per-day sales in the year) were 50 days, compared to 41 days as on March 31, 2023. The Company constantly focuses on reducing its receivables period by improving its collection efforts.
Trade receivables unbilled
Unbilled trade receivables amount to I 3,001.40 million as on March 31, 2024, compared to I 3,584.40 million as on March 31, 2023.
Cash and bank balances
Cash balance represents balance in cash with the Company to meet its petty cash expenditures. The bank balances in
India include both Rupee accounts and foreign currency accounts. The bank balances in overseas current accounts are maintained to meet the expenditure of the overseas subsidiaries and branches. The cash and bank balance as on March 31, 2024, was I 1,747.74 million compared to I 1,515.40 million as on March 31, 2023. This increase in cash was due to cash generated from operating activities offset by cash used in payment of dividend, repayment of borrowings and repayment of other financial liabilities.
Other financial assets
Other Financial Assets as on March 31, 2024, were I 919.44 million compared to I 528.20 million as on March 31, 2023. The increase in these assets was on account of increase in deposits and foreign currency forward contracts.
Other current assets
The other current assets of the Company as on March 31, 2024, were I 1,486.16 million compared to I 1,506.78 million as on March 31, 2023. This decrease is majorly due to decrease in prepaid expenses.
Results of operations
The table below sets forth, for the periods indicated, certain income and expense items for the Companys consolidated operations:
| Particulars | FY 24 | FY 23 | ||
| (K mn) | % of income | (K mn) | % of income | |
| Income from services | 63,325.28 | - | 59,859.27 | - |
| Other operating income | 37.17 | - | 363.91 | - |
| Revenues from operations | 63,362.45 | 100% | 60,223.18 | 100% |
| Expenditure | ||||
| Personnel cost | 39,093.25 | 61.7% | 38,674.81 | 64.2% |
| Other expenses | 14,704.80 | 23.2% | 13,283.32 | 22.1% |
| Operating EBITDA (earnings before interest, tax and depreciation) | 9,564.40 | 15.1% | 8,265.05 | 13.7% |
| Depreciation and amortisation | 2,602.24 | 4.1% | 2,631.70 | 4.4% |
| Operating EBIT (earnings before interest and tax) | 6,962.16 | 11.0% | 5,633.35 | 9.4% |
| Finance charges | 1,033.85 | 1.6% | 789.70 | 1.3% |
| Share in net (profit)/loss of associate | - | - | - | - |
| Other income | 368.44 | 0.6% | 1,308.50 | 2.2% |
| Profit before exceptional item and tax | 6,296.75 | 9.9% | 6,152.15 | 10.2% |
| Profit before tax | 6,296.75 | 9.9% | 6,152.15 | 10.2% |
| Provision for taxation | ||||
| - Current tax expense (including MAT) | 900.54 | 1.4% | 657.63 | 1.1% |
| - Deferred tax charge | 248.96 | 0.4% | 357.40 | 0.6% |
| Profit after tax before minority interest | 5,147.25 | 8.1% | 5,137.12 | 8.5% |
| Minority interest | (0.04) | 0.0% | (0.08) | 0.0% |
| Profit after tax | 5,147.29 | 8.1% | 5,137.20 | 8.5% |
Income
Income from services
Income from services increased by 5.8% to I 63,325.28 million in FY 24 from I 59,859.27 million in FY 23. The Company attributes this increase in its income from services to new business from existing clients and addition of few new clients. The average exchange rate for consolidation of subsidiaries for USD and GBP in FY 24 was I 82.78 per USD and I 104.05 per GBP compared to I 80.27 per USD and I 96.73 per GBP in FY 23.
Consolidated revenues by segment
The Company serves clients for banking and financial services, healthcare, communication, media and technology and diverse industries. Clients from banking and financial services accounted for 39.3% (FY 23: 42.9%), clients from healthcare accounted for 33.0% (FY 23: 33.5%), clients from communication, media and technology accounted for 22.3% (FY 23: 21.1%), clients from diverse industries accounted for 5.4% (FY 23: 2.5%) of the income from services in FY 24. The following table gives a segment-wise breakdown of the income from services for the corresponding periods:
| FY 24 | FY 23 | |
| Business segment | ||
| Banking and financial services | 24,856.63 | 25,652.81 |
| Healthcare | 20,874.04 | 20,063.14 |
| Communication, media and technology | 14,113.39 | 12,644.53 |
| Diverse industries | 3,481.22 | 1,498.79 |
| Total | 63,325.28 | 59,859.27 |
Consolidated revenues by geography
The Company serves clients in the US, the UK and India. Clients from the US accounted for 64.8% (FY 23: 66.0%), clients from the UK accounted for 35.1% (FY 23: 33.0%), clients from India accounted for 0.1% (FY 22: 1.0%). The following table gives a segment-wise breakdown of the income from services for the corresponding periods:
| FY 24 | FY 23 | |
| Geography | ||
| UK | 22,239.21 | 19,773.83 |
| USA | 41,012.03 | 39,461.79 |
| Asia | 74.04 | 623.65 |
| Total | 63,325.28 | 59,859.27 |
Client concentration
The following table shows the Companys client concentration by presenting income from the top client and top five clients as a percentage of its income from services for the periods indicated:
| FY 24 | FY 23 | |||
| Amount | % | Amount | % | |
| Client concentration to revenues | ||||
| Top client | 8,867.91 | 14.0% | 9,184.28 | 15.3% |
| Topfive | 22,937.78 | 36.2% | 22,272.82 | 37.2% |
| All clients | 63,325.28 | 100.0% | 59,859.27 | 100.0% |
In FY 24, the Company had top client accounting for 14.0% of the income from services compared to top client accounting for 15.3% of its income from services in FY 23.
The Company derives a significant portion of its income from a limited number of large clients. In FY 24, the Company had 20 clients contributing individually over I 500 million each in annual revenues compared to 17 in FY 23. In
FY 24 and FY 23, income from the Companys five largest clients amounted to I 22,937.78 million and I 22,272.82 million respectively, accounting for 36.2% and 37.2% of its income from services respectively. Although the Company continues to increase and diversify its client base, it expects that a significant portion of its income will continue to be contributed by a limited number of large clients in the near future.
Other operating income
Other operating income of I 37.17 million in FY 24 (FY 23: I 363.91 million) includes exchange gain of on restatement and settlement of debtor balances and related gain/(loss) on forward/option contracts as these transactions relate to the operations of the Company.
Revenues from operations
The Companys revenues from operations increased by 5.2 % to I 63,362.45 million in FY 24 from I 60,223.18 million in FY 23 in rupee terms and grew by 1.1% in constant currency terms.
Expenditure
Personnel costs
Personnel costs increased by 1.1 % to I 39,093.25 million in FY 24 from I 38,680.41 million in FY 23, with the number of employees increasing to 27,940 as on March 31, 2024, from 23,018 as on March 31, 2023. As on March 31, 2024, 9,953 employees were employed outside India and 17,987 employed in India compared to 10,623 employees outside India and 12,395 employees in India as at end of FY 23.
Other expenses
Other expenses for FY 24 amounted to 23.2 % of the income for that period, compared to 22.0% of income in FY 23. Operating costs increased to I 14,704.80 million in FY 24 from I 13,277.72 million in FY 23. This increase is majorly due to increment in operating expenses with high variability.
Operating EBITDA (earnings before interest, tax and depreciation)
As a result of the continuing operations, operating EBITDA increased by I 9,564.40 million to I 8,265.05 million in FY 24. Operating EBITDA in FY 24 is 15.1% of income compared to 13.7% in FY 23.
Depreciation
Depreciation costs for FY 24 amounted to 4.1% of the income for that period, compared to 4.4% in FY 23. Depreciation increased year-on-year by I 2,602.24 million in FY 24 from I 2,631.70 million in FY 23.
Operating EBIT (Earnings before interest and tax)
Operating Earnings before Interest and Tax (EBIT) increased by I 1,328.81 million to I 6,962.16 million in FY 24 from I 5,633.35 million in FY 23. Operating EBIT in FY 24 is 11.0% compared to 9.4% in FY 23.
Finance cost
Finance cost for FY 24 amounted to 1.6% of income for that period, compared to 1.3% of income in FY 23. Finance charges increased to I 1,033.85 million in FY 24 from I 789.70 million in FY 23.
Other income
Other income decreased to I 368.44 million in FY 24 from I 1,308.50 million in FY 23. The components of other income in FY 24 were profit from the sale/redemption of current investments of I 62.11 million, loss on sale of fixed assets of I 55.91 million, interest income of I 9.88 million, foreign exchange loss of I 17.08 million and other miscellaneous income, net of I 335.28 million which is on account of changes in the fair value of the liabilities for purchase of non-controlling interest and contingent considerations respectively.
Profit before tax
Profit before tax increased to I 6,296.75 million in FY 24 from a profit before tax of I 6,152.15 million in FY 23. Profit before tax in FY 24 was 9.9% of the income, compared to 10.2% of the income in FY 23.
Provision for taxation
Provision for taxation increased to I 1,149.50 million in FY 24, from I 1,015.03 million in FY 23. Income tax expense comprises of current tax, net change in the deferred tax assets and liabilities in the applicable FY period and minimum alternate tax credit. Current tax expense comprises tax on income from operations in India and foreign tax jurisdictions.
The Company had the benefit of tax-holiday under Section
10AA under the Special Economic Zone scheme, since few of the centres in India are in special economic zones. Current tax expense amounted to I 900.54 million in FY 24 compared to I 657.63 million in FY 23, and deferred tax charge of I 248.96 million in FY 24 compared to a deferred tax charge of I 357.40 million in FY 23.
Profit after tax before minority interest
As a result of the foregoing, profit after tax before minority interest increased to I 5,147.25 million for FY 24 from profit after tax before minority interest of I 5,137.12 million in FY 23.
Minority interest
Minority interest is I (0.04) million in FY 24 compared to I (0.08) million in FY 23.
Profit after tax
As a result of the foregoing, profit after tax to I 5,147,29 million in FY 24 from profit after tax of I 5,137.20 million in FY 2023-23. Profit after tax in FY 24 was 8.1% of the income, compared to 8.5% of the income in FY 23.
Liquidity and capital resources cash flows
The Company needs cash to fund the technology and infrastructure requirements in its operation centres, to fund its working capital needs, to pay interest and taxes, to fund acquisitions and for other general corporate purposes. The Company funds these capital requirements through variety of sources, including cash from operations, short and long-term lines of credit and issuances of share capital. As of March 31, 2024, the Company had cash and cash equivalents of I 1,747.74 million. This represents cash and balances with banks in India and abroad.
The Companys summarized statement of consolidated cash flows is set forth below:
| FY 24 | FY 23 | |
| Net cash flow from operating activities | 6,447.91 | 7,950.23 |
| Net cash flow generated from/(used in) from investing activities | (579.93) | 163.53 |
| Net cash flow used in financingactivities | (5,641.87) | (7,433.83) |
| Cash and cash equivalents at the beginning of the year | 1,515.40 | 828.20 |
| Foreign exchange gain on translating | 6.23 | 7.26 |
| Cash and cash equivalents | ||
| Cash and cash equivalents at the end of the year | 1,747.74 | 1,515.40 |
Operating activities
Net cash generated from the Companys operating activities in FY 24 amounted to I 6,447.91 million. This consisted of net profit before tax of I 6,296.75 million and a net upward adjustment of I 3,272.93 million relating to various non-cash items and non-operating items including depreciation of I 2,602.24 million; net decrease in working capital of I 2,404.02 million; and income taxes paid of I 717.75 million. The working capital change was due to increase in trade receivables of I 1,545.95 million, increase in loans and advances by I 1,266.75 million and increase in liabilities and provisions by I 408.68 million.
Net cash generated from the Companys operating activities in FY 23 amounted to I 7,950.23 million. This consisted of net profit before tax of I 6,152.15 million and a net upward adjustment of 1,689.04 million relating to various non-cash items and non-operating items including depreciation of I 2,631.70 million; net increase in working capital of I 764.96 million; and income taxes paid of I 655.92 million. The working capital change was due to increase in trade receivables of I 964.92 million, decrease in loans and advances by I 647.07 million and increase in liabilities and provisions by I 1,082.82 million.
Investing activities
In FY 24, the Company used I 579.93 million of cash from its investing activities. These investing activities included capital expenditure of I 850.43 million, including fixed assets purchased and replaced in connection with the Companys operation centres in the UK, the USA and India and net purchase of money and debt market mutual funds amounting to I 324.34 million.
In FY 23, the Company generated I 163.53 million of cash from its investing activities. These investing activities included capital expenditure of I 536.22 million, including fixed assets purchased and replaced in connection with the Companys operation centres in UK, USA and India and net purchase of money and debt market mutual funds amounting to I 637.42 million.
Financing activities
In FY 24, net cash used in financing activities amounted to I 5,641.87 million. This comprised of repayment of long term borrowings of I 1,609.77 million, proceeds from long term borrowings of I 41.16 million, repayment of short term borrowings of I 1,277.99 million. The Company paid towards purchase of Non-controlling Interest in a subsidiary of I 583.32 million, interest of I 1,010.70 million, purchase of treasury shares (net) of I 58.85 million. During the year, the Company also paid dividend of I 2,405.94 million to its shareholders and repaid lease liability of I 1,410.14 million.
In FY 23, net cash used in financing activities amounted to
7,433.83 million. This comprised of repayment of long term borrowings of I 424.96 million, proceeds from long term borrowings of I 50.49 million, repayment from short term borrowings of I 1,976.70 million. The Company paid towards purchase of Non-controlling Interest in a subsidiary of I 276.40 million, interest of I 787.42 million, purchase of treasury shares of I 139.58 million. During the year, the Company also paid dividend of I 2,384.45 million to its shareholders and repaid lease liability of I 1,494.81 million.
Cash position
The Company funds its short-term working capital requirements through cash flow from operations, working capital overdraft facilities with commercial banks, medium-term borrowings from banks and other commercial financial institutions. As of March 31, 2024, the Company had cash and bank balances of I 1,747.74 million compared to I 1,515.40 million as on March 31, 2023.
Key financial ratios
| Ratios | FY 24 | FY 23 |
| Debtors turnover | 7.36 | 8.80 |
| Current ratio | 0.9 | 0.9 |
| Debt-equity ratio | 0.2 | 0.2 |
| Interest coverage | 7.1 | 8.8 |
| Operating EBITDA | 15.1% | 13.7% |
| Operating EBIT | 11.0% | 9.4% |
| Net profit margin | 8.1% | 8.5% |
The table presents key financial ratios, as applicable, for
Firstsource Solutions Limited.
Human resources
We at Firstsource believe our people strategy reflects our values, which serve as a moral compass for all our actions and decisions. Our people strategy revolves around four pillars that guide our people practices, align with our business strategy, and achieve overarching goals. We believe that aligning the HR strategy with our core values can attract and retain employees who share our principles and beliefs, thereby leading to a more engaged and productive workforce.
Partnering for business growth
As of March 31, 2024, Firstsource had 27,940 employees, reflecting a year-on-year increase of 4,922 compared to 23,018 employees on March 31, 2023.
Talent acquisition
The Companys hiring teams achieved a remarkable milestone by recruiting 20,136 individuals globally (since April 2023). We have achieved this increase in a commercial and timely manner with 99% adherence to delivery timelines required by the business. The teams dedication to hiring targets is a testament to the commitment to deliver exceptional value to business, and we are confident that our focus on top talent acquisition will continue to fuel our growth.
As part of our recruitment strategy, we are committed to nurturing young talent through trainee programmes. These programmes are a vital channel to attract young talent who aspire to excel in their careers. The Companys sponsorship of apprenticeship programmes in the UK and India is a testament to this commitment, and we look forward to welcoming more young talents into our fold. In India, we hired 1,783 (hired) trainees under the National Apprenticeship Promotion Scheme (NAPS) and the National Apprentice Training Scheme (NATS) run by the government.
While delivering this growth, we have kept a sharp focus on our employee band and geography mix, a key factor in our businesss long-term profitability and sustainability. Our band mix has improved to include 88.04% frontline employees against 87.1% in March 2023. The percentage of offshore employees has improved by 10.7%, with 68.7% of our workforce based in offshore locations, against 58.1% in March 2023.
This strategic focus ensures the stability and growth of our business, providing our employees with a secure and sustainable work environment.
Talent retention
We remain committed to continuously improving our retention and believe that prioritising employee retention is critical to building a more robust and sustainable business in the long term.
As an outcome of our focused effort, overall attrition has reduced by 16.4% y-o-y from FY2022-23.
• Key components of our retention strategy are as follows:
• Improved sourcing.
• More vigorous background checks to ensure only the right-fit candidates join us.
• Early onboarding support.
Delivering meaningful employee experiences digitally
Our commitment to employee engagement is evident through diverse initiatives and programmes implemented across different locations and business units. These initiatives focus on nurturing and supporting employees with continuous training, development, engagement, and wellness initiatives.
Key communication forums
• firstConnect: firstConnect is our global digital platform for grievance resolution. An in-house developed tool aims to track and resolve employee concerns/feedback/grievances in a timely and effective manner through robust governance, thereby creating a delightful employee experience.
• firstWorld: firstWorld is our global digital internal communication platform where one can explore the world of Firstsource. It has everything about Firstsource and Firstsourcers. Company policies,
HR tools, stories of Firstsource events happening across the globe, brand information and our initiatives are available on the intranet.
• Goal cascade sessions: These sessions explain the organisation and function goals to Firstsourcers to help them establish a better sense of direction and purpose and realize how their work contributes to attaining overall organisational objectives.
• Skip-level meetings: These are meetings between managers and team members of their direct reports. The purpose of a skip-level meeting is for managers to get to know the larger team better and for the team to provide feedback and suggest ways to improve team performance.
• Open house: These sessions are attended by all Firstsourcers to gain an understanding of the organisations plans, goals, and updates and ask any questions they might have.
• Lets Talk: This is a forum where senior leaders interact with the larger teams and share their views, thoughts, and plans for the organisation. These sessions are inspiring for Firstsourcers as they get an opportunity to interact with senior leadership.
Wellness initiatives
Firstsource is a holistic approach towards employee wellness, supporting Firstsourcers across the globe. It includes regular support, training and programmes on mental health, physical health, social health, financial health, emotional health, and environmental health.
• Mental health first aiders programme: At Firstsource, we have a Mental Health First Aiders programme to help people achieve their full potential and cope with stress better. FSL has sponsored MHFA certification for our people and frontline managers to help them cope during difficult times and assist their team members.
• Wellness Wednesday: We hold Global Virtual Wellness sessions every Wednesday, spotlighting a specific wellness aspect. We have introduced Tai
Chi, BollyX, and #WalkThisMay to keep Firstsourcers moving and grooving all year long. Through our transformative Virtual Health Session, we have enabled conversations on subjects like addiction, suicide, menopause, and mental health.
• Silver Oak Health: We have joined forces with Silver Oak Health, our Employee Assistance Programme partner. They offer professional counselling services by qualified and experienced clinical psychologists and psychotherapists. All their counsellors have received training in Cognitive Behavioural Therapy (CBT) and Positive Psychology. Silver Oak Healths
EAP offerings include:
Face-to-face counselling.
Phone counselling.
Video call, chat, and e-mail channels.
Grief/Crisis management.
Critical incident stress debriefing (CISD).
Enabling career mobility Wings Within
Firstsource believes in promoting talent from within the organisation. To identify talent internally, we have Wings Within, which acts as a growth mechanism where employees can explore opportunities both vertically and laterally. This provides a growth path for our employees. Wings Within provides all eligible employees a fair and equitable opportunity to grow within the organisation. It assesses the internal candidates transparently and objectively.
Our equal employment team conducts a rigorous selection process to choose the right employees from a pool of nominees based on business requirements.
Fostering a culture of recognition
Firstsource launched a recognition campaign called #AppreciationAmplified. It focuses on a specific monthly recognition theme to make it easier for employees to appreciate colleagues, leaders, managers, and co-workers who demonstrate qualities and behaviours aligned with the theme. The results have been heartening, with over 80,000 non-monetary appreciations given through the FirstReward platform this year. In addition, we have various business, functional, and global reward and recognition programmes focused on performance, core values, and delivering excellence, through which we have distributed over 26,000 monetary rewards this year.
• Global leadership awards: The Global Leadership Awards (GLA) are the most prominent forum for recognising and celebrating the achievements of leaders and their extraordinary contributions to business. After receiving 89 nominations across 11 award categories, 21 individuals and 20 high-performing teams emerged as winners following a rigorous evaluation process.
• Group awards: As part of the Group Foundation
Day celebrations, the RPSG Group annually recognizes high performers across four categories – Outstanding Achiever Award, Young Achiever Award, Top Gear Award and Core Value Champion Award. These awards honour and recognize managers who can significantly contribute to the organisations success by consistently exceeding or exceeding their job requirements. In addition, the Group recognizes employees across all its companies for their outstanding performance in ‘Sangeet Sitara, a talent show. Having undergone a structured and rigorous nomination and screening process, four of our employees won Group Awards across Top Gear and Core Value Champion categories. We recognized them for their extraordinary contributions to the organisations success.
Listening to employees through surveys
Firstsource believes in nurturing a work environment where employees feel valued and heard. To achieve this, we have implemented a robust survey programme enabling us to actively listen to employee feedback and insights.
The survey programme utilizes Viva Glint, a Microsoft survey management platform, to gather feedback on crucial employee engagement and experience drivers. We successfully conducted two Pulse surveys in June 2023 (with 69% participation and 87% overall favourability) and February 2024 (where we had 73% participation and 80% overall favourability).
Building a talented and diverse workforce
Opportunities to learn and grow
In FY 2023-24, we emphasized the importance of adapting to rapidly changing markets to sustain employee productivity and progress against business goals. We aim to cultivate a culture of continuous learning and curiosity, providing opportunities for reskilling and upskilling that cater to the diverse needs of our talent.
We encourage employees to take charge of their learning and career paths and commit to an Individual Development Plan (IDP) early in the year. Individuals could choose from diverse learning opportunities, including e-learning, facilitated workshops, webinars, gamified simulations, peer learning sessions, and other self-directed and external learning opportunities. As a result, 2,993 unique learners from the cohort of managerial employees consumed nearly 30,000 hours of learning, with an average of 6.24 hours per employee.
By participating in the Retention Amplified programme, our frontline leaders, hiring managers, and trainers contributed significant time to learning. They gained skills and toolkits to engage and assimilate new hires, which improved our early attrition numbers.
Around one-fourth of the learning effort was spent on
Digital and AI-related topics, and Leaders participated in a Digital Learning sprint to quickly upskill themselves on the rapidly emerging technologies in our industry.
Inclusion and diversity
Firstsources focus on diversity and inclusion has helped to create a holistic and productive workplace and has positioned Firstsource as an employer of choice for diverse talent.
At Firstsource, we value the diversity of cultures, identities, and perspectives of our global workforce. Our constant endeavour is to build a purposeful and intentionally inclusive workplace where all employees can bring their whole selves to work. We are committed to achieving this through continuous learning to strengthen our collective awareness and inclusion capability. We embrace a culture of openness and respect and encourage candid conversations about inclusion and belonging through several forums.
For us, inclusion is a continuous journey of listening, learning, celebrating, and accomplishing more together. Some key facts are below:
• In the most recent employee survey, 84% of our employees agreed, "At this company, everyone can succeed to their full potential, irrespective of age, culture, gender, race or religious background."
• Women represent 44% of our workforce and occupy 32% of our leadership positions.
• Bloomberg Gender-Equality Index has recognized Firstsource in 2022 and 2023.
• Stonewall has also recognized Firstsource on LBGTQ practices and age collaboration networks.
Initiatives undertaken to promote inclusion and diversity
At Firstsource, we are deeply committed to fostering an inclusive and diverse workplace that celebrates our global workforces richness of cultures, identities, and perspectives. Our dedication to inclusion and diversity (I&D) is integral to our organisational ethos. We aim to create a work environment that values, respects, and empowers every employee to bring their authentic selves to work. Some of our interventions are as follows:
• Women@Firstsource actively engages in external events to establish connections, gain insights into industry best practices, and integrate them into Firstsources operations.
• WiN Wellness Sessions delved into crucial aspects of womens health and well-being, fostering a holistic approach to self-care and resilience. We empowered the participants to prioritize their physical, emotional, and mental wellness through engaging discussions and informative sessions. This year, we have hosted seven sessions.
• Over 3,000 employees participated in the International Womens Day events across the globe.
• We showcased 40 inspiring stories of Internal and external leaders under WiN Glories and Stories.
• Stellar-We mentoring programme is an exclusive development series for high-potential female leaders. Eight high-potential leaders are identified to participate in this journey, where they get an opportunity to be mentored by leaders from other organisations. This programme gives participants an outside-in perspective and learnings that help them navigate their career journeys.
Focusing on technology and sustainability
HR technology
We are incrementally building towards a digitally enabled, integrated experience across the employee lifecycle. Following the launch of FirstPlace in January 2023, Phase-II implementation introduced new and improved digital employee experience on employee lifecycle processes like Performance & Goal Management, Learning Management System, Compensation Management, Succession Planning and Career Development. With the completion of Phase-II Implementation, FirstPlace is a one-stop for all hire-to-retire activities in an employee life cycle. Our next focus is to enable a chatbot for query management. This move is a step towards automating routine tasks and providing employees with access to timely information and support, thereby enhancing employee experience and allowing HR to be a true strategic partner.
Automation and consolidation in HR processes
To continuously upgrade and improve our employees experience, centralized support processes and teams were set up for the following employee services.
• Onboarding of employees
• Time and attendance support
• Background verification
• Employee query management
• Payroll processing support
Our dedicated HR operations team has taken a significant step in improving our processes. We have implemented Robotic Process Automation (RPA) to enhance the efficiency and reliability of onboarding and employee lifecycle management activities. This change is a testament to our commitment to providing our people with the best possible support.
A centralized HR analytics team has been set up to consistently track, analyse, and publish key HR metrics and other people-related data pertinent to our business.
Delivering community impact
As a purpose-led organisation, we are infusing sustainability into the core of our transformation and creating a tangible impact in the lives of our people, clients, shareholders, and the community. Overall, we have had 15,476 participants, enabling 604 unique events by contributing 14,730 hours to impact 45,978 lives and create 11,875 impacts on the planet.
Through CSR partners, we also support impact-sourcing projects in India. This year, we have partnered with 13 organisations, helping 500 underrepresented and unemployed youth, including people with disabilities, get career guidance and the opportunity to get screened for various job positions in Firstsource.
Community projects
Firstsources CSR team spent 100% of the allocated I 10.1 million on 14 projects across various places in India. Of the overall funds, we utilized 44% for ‘Empowerment and Gender equality projects. We allocated 28% towards education projects, followed by healthcare and environment, where the allocations were 20% and 8%, respectively. Through these projects, we impacted 12,603 lives and maintained 7,000 trees. We executed these initiatives through various non-profit partners. This effort excludes the CSR projects done through RPSG Group Trust.
Employee volunteering
Through the ‘Every Leader a Volunteer campaign, we saw an increase in global leadership participation. This year, around 128 D+ leaders contributed to the Community Outreach programme through their participation, contributing 660 hours, which comprised 22% of the overall leadership headcount. Firstsources leaders empowered young minds through mentorship sessions, virtual classroom teaching, career guidance, women empowerment sessions, and livelihood support projects, and they shared their deep expertise by providing pro bono support in technology and consulting. They have also been a significant support for the launch and milestones of Firstsources CSR projects.
Firstsourcers across the globe continued to share their time and knowledge through various events anchored by CSR/ HR teams across all countries. Overall, we had 3,810 unique volunteers across the globe who contributed 14,730 hours of volunteering and impacted 38,094 lives.
• High-impact structured volunteering programmes like eVidyaloka virtual classroom teaching, FFE, and FEA mentorship continued to see traction among the employees where our employee volunteers are committed to providing long-term support spanning three to six months, teaching, or mentoring students.
• Volunteers in the UK, the US, and the Philippines participated in virtual expert sessions on environmental awareness, pride month celebrations, food packaging and distribution, and other activities to support our communities.
• In India, volunteers participated in various environmental activities such as clean-ups, plantations, farming, microgreen growing, and eco-friendly bag making. They also supported medical camps, conducted insightful sessions in childrens homes and government schools, supported marathons, pro bono work for NGOs, and livelihood support for community well-being.
Firstsourcers worldwide continued showing their love and affection for communities by contributing regularly to charity through fundraising and employee giving programmes. Overall, 1,274 unique donors contributed an amount of I 15,07,468. In the UK, employees donated to regular employee giving programmes and participated in various fundraising events.
• Volunteers from Manila and Cebu enabled the Christmas basket initiative in the Philippines by giving packaged foods to needy people from the employee contribution funds.
• In the US, employees supported causes such as Candy Drive for patients in childrens hospitals, the Angel Tree initiative, and the Salvation Army.
• In India, the employee-giving programme positively impacted over 2,600 students through initiatives such as Gift a Smile, Book a Smile, and STEM lab.
• Across the globe, through various in-kind donations, employees donated stationeries, toys, clothes, and books for those in need.
Internal control systems and their appropriateness
Firstsource has institutionalized a system of internal controls, with documented procedures covering all corporate functions. Internal controls provide reasonable assurance regarding the effectiveness and efficiency of the reliability of financial controls, and compliance with applicable laws and regulations.
Cautionary statement
This document contains statements about expected future events, financial and operating results of your Company, which are forward-looking. By their nature, forward-looking statements require our Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate.
Readers are cautioned not to place undue reliance on forwardlooking statements as several factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Firstsource Solutions Annual
Report for the Financial Year 2023-24.
| Board of Directors | Designation |
| Dr Sanjiv Goenka | Chairman |
| Shashwat Goenka | Vice - Chairman |
| Vipul Khanna | MD & CEO (upto the closing business hours on August 31, 2023) |
| Ritesh Idnani | MD & CEO (w.e.f. September 01, 2023) |
| Pradip Kumar Khaitan | Non-Executive, Non-Independent Director |
| Subrata Talukdar | Non-Executive, Non-Independent Director |
| Sunil Mitra | Non-Executive, Independent Director |
| Vanita Uppal | Non-Executive, Independent Director |
| Utsav Parekh | Non-Executive, Independent Director |
| Rekha Sethi | Non-Executive, Independent Director (w.e.f. September 01, 2023) |
| T. C. Suseel Kumar | Non-Executive, Independent Director (w.e.f. September 01, 2023) |
| Pratip Chaudhuri | Non-Executive, Independent Director (upto the closing business hours on March 31, 2024) |
| Anjani K. Agrawal | Non-Executive, Independent Director (upto the closing business hours on May 10, 2024) |
| Dr Rajiv Kumar | Non-Executive, Independent Director (w.e.f. May 03, 2024) |
| COMPANY SECRETARY | Investment Committee |
| Pooja Nambiar | Shashwat Goenka - Chairman |
| Vipul Khanna (upto the closing business hours on August 31, 2023) | |
| COMMITTEE DETAILS | |
| Audit Committee | Ritesh Idnani (w.e.f. September 01, 2023) |
| Utsav Parekh - Chairman | Subrata Talukdar |
| Anjani K. Agrawal (upto the closing business hours on May 10, 2024) | Strategy Committee |
| Sunil Mitra | Shashwat Goenka - Chairman |
| T C Suseel Kumar (w.e.f. May 11, 2024) | Vipul Khanna (upto the closing business hours on August 31, 2023) |
| Subrata Talukdar | Ritesh Idnani (w.e.f. September 01, 2023) |
| Nomination and Remuneration Committee | Subrata Talukdar |
| T C Suseel Kumar - Chairman (Appointed as a Member w.e.f. April 01, 2024 and Chairman w.e.f. May 11, 2024) | Registered Office |
| Anjani K. Agrawal - Chairman (upto the closing business hours on May 10, 2024) Utsav Parekh (w.e.f. April 01, 2024) Pratip Chaudhuri (upto the closing business hours on March 31, 2024) Subrata Talukdar | Firstsource Solutions Limited CIN: L64202MH2001PLC134147 5th Floor, Paradigm ‘B Wing, Mindspace, Link Road, Malad (West), Mumbai – 400 064, India. |
| www.firstsource.com | |
| Stakeholders Relationship Committee | |
| Subrata Talukdar - Chairman | Statutory Auditors |
| Vipul Khanna (upto the closing business hours on August 31, 2023) | Deloitte Haskins & Sells LLP Chartered Accountants |
| Ritesh Idnani (w.e.f. September 01, 2023) Anjani K. Agrawal (upto the closing business hours on May 10, 2024) Rekha Sethi (w.e.f. May11, 2024) | One International Center, Tower 3, 27th -32nd Floor, Senapati Bapat Road, Elphinstone Road (West), |
| Corporate Social Responsibility Committee | |
| Mumbai – 400 013, India. | |
| Shashwat Goenka - Chairman | |
| Vipul Khanna (upto the closing business hours on August 31, 2023) | Major Bankers |
| Bank of the Philippines Islands | |
| Ritesh Idnani (w.e.f. September 01, 2023) | Barclays Bank Plc |
| Anjani K. Agrawal (upto the closing business hours on May 10, 2024) | Citibank, N.A. |
| DBS Bank India Limited | |
| Subrata Talukdar | HDFC Bank Limited |
| Dr Rajiv Kumar (w.e.f. May 11, 2024) | HSBC Bank Limited |
| Risk Management Committee | ICICI Bank Limited |
| Shashwat Goenka - Chairman | IDFC First Bank Limited |
| Vipul Khanna (upto the closing business hours on August 31, 2023) | Standard Chartered Bank |
| Ritesh Idnani (w.e.f. September 01, 2023) | RBL Bank Limited |
| Vanita Uppal | Kotak Mahindra Bank Limited |
| Dinesh Jain | PNC Bank, N.A. |
| Arun Tyagi (upto the closing business hours on January 18, 2024) | Nomura International PLC |
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