The Hindu Business Line : MphasiS eyes healthcare

Margins could drop for call centres tracking the sudden spurt in hiring on speedy ramp-ups and greater visibility. The new recruits undergo a training period till they are billable, dragging the margins down.

BANGALORE, March 18

SOFTWARE maker MphasiS-BFL Ltd. plans to set up a separate services vertical on healthcare, buoyed by the current traction of three existing clients in that segment, company sources have said.

MphasiS currently caters to Pfizer, Johnson& Johnson and a Singapore hospital's software needs in the healthcare space. It is understood that company is recruiting laterals with in-depth knowledge in healthcare segment.

Meanwhile, fresh recruitment of close to 200 for the call centre subsidiary, MsourcE, could drag the gross margins down to a negative territory in the fourth quarter of the current financial year, sources said. "This would be because of rapid ramp-ups", they said, adding that several clients added during the first or second quarter of the current fiscal were "maturing".

For the third quarter ending December last year, operating losses for MsourcE was - 3.1per cent of its revenues as compared to 9.7 per cent a quarter ago. Margins could drop for call centres tracking the sudden spurt in hiring on speedy ramp-ups and greater visibility. The new recruits undergo a training period till they are billable, dragging the margins down.

MphasiS has also signed up Fidelity as a new client. Fidelity outsources some of its software needs to Infosys. Engagements with Charles Schwab and Compaq are seen growing and the company is also likely to strengthen its technology practice following a spurt in efforts with NEC and Compaq.

The company expects to sustain its momentum in client acquisition on a quarter-on-quarter basis, but does not see immediate traction from new wins.

Meanwhile, the company's mandate to Citigroup's investment banking arm, Salomon Smith Barney to search for potential investor(s) is likely to have been shelved for awhile following MphasiS' proposed buy-out of Sanghai-based Navion.

Earlier, the company mandated SSB on roping in an investor who could range from a technology firm to `anyone' who could help in scaling up its operations. However, there was no definite timeframe to bring in the investor.

Post-Navion buy-out proposal, MphasiS stands to scale up its strongest vertical of banking, financial services and insurance, since Navion, a niche captive software maker arm of financial powerhouse Capital One, would help in scaling up the domain's offerings.

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