EXL evaluates low-cost locations in US to set up sixth centre

Offshore BPO company ExlService Holdings wants to set up another delivery site in the US to service its new clients. The new site will be its sixth location in the US.

EXL is studying a “large list” of low-cost sites including North Dakota, South Carolina and Virginia, which can offer 25-30 per cent cost differential compared to prime locations.

“We are assessing these locations from the point of view of skills, cost, accessibility, and workforce availability,” says Mr Rohit Kapoor, President and CEO of EXL.

100-seat capacity

He said the timeline to set up the centre would be linked to new deal signs up. “It won't be large facility…it will probably be 100 seat capacity,” he said.

At present, EXL has BPO delivery centres in Houston, Dallas, Washington DC, Hartford, and New Jersey. These centres are running full capacity. In all, the company has 500 employees in the US, close to 300 of them on the delivery side and the rest in sales and marketing, corporate, and consulting functions.

Part of the US headcount is a result of the acquisition that the company has done in the past, including Outsource Partners International and the more recently Trumbull Services.

“Many of the locations we have in the US have come by way of acquisitions. So now we are evaluating a new site as a long-term solution and assessing which location is best suited for us and our clients,” he said.

The margins in the US are, of course, lower than offshore locations such as India and the Philippines. Offshore sites could fetch gross margin of about 40 per cent, while in the US that could be 20-30 per cent. Still, the US delivery piece is an important strategic element of the overall relationship with customers, Mr Kapoor added.

“Without having that piece, you cannot service clients end-to-end,” he said. This is because there are many processes where local regulations require service providers to have a US presence. “For instance, we do some work as a TPA (Third Party Administrator). In TPA, the critical element is decision on adjudication, which needs to be done onshore (in the US). The rest including processing and follow ups, and collating information can be done in offshore locations (like India),” he said.

‘Biz is doing well'

Mr Kapoor said the company has not seen any slowdown in business. “Our clients are impacted by slowdown, but our business is doing well, because clients are focused on cutting cost and improving quality,” he said. Globally, the penetration of offshore BPO services is only 15 per cent and hence the legroom for offshore growth in significant, he added.