It’s the biggest merger story in the Indian IT/BPO space in recent times. Within the Tata Group also, it is seen as a strategic blending of the strengths of two companies —Tata Business Support Services (TBSS) and the e-nxt Financials (a 50:50 holding firm of Tata Sons and Tata Capital).
The man steering the transformation is Srini Koppolu, the MD and CEO of the combined entity. In just over a decade, TBSS has notched up a revenue of over ₹6 billion, emerging as one of the top three BPOs in the country.
Koppolu virtually landed himself with the huge task of facilitating the merger. Tata Group Chairman Cyrus Mistry is fully backing the move and, hence, the process is on the right course, he told
I am happy to tell you that the merger process is almost completed. The last step of legal approval is awaited from Mumbai. Already, the High Court in Hyderabad has given the green signal. The entire technology integration is done. By the middle of May, we hope to tie up all ends. TBSS is 13,000 strong and the e-nxt Financials is around 7,000. The combined entity has around 22,000 employees now.
What about the employee issues — restructuring, role changes and departmental integration, etc?
Luckily for us, on the ground and at the lower levels, there has been a seamless integration of the workforce.
Most of the staff have been accommodated with defined roles. In cases of excess, the employees have been given the option of moving into Tata Group’s sister companies.
However, at the top leadership level, the overlap of roles has resulted in some changes, exits, etc. The going has been tough here.
How does the merger help the company?
The merger is a unique one. TBSS is a large corporate organisation and a BPO, while e-nxt is a feet on the street collection business major. It is a good extension of our own business. The strengths of e-nxt are that it is strong in the BFSI (banking, financial services and insurance) segment, has big presence in Mumbai and globally in Europe, which TBSS does not have. This synergy in the merged entity will stand us in good stead. We have 64-65 major customers now. The turnover of the combined entity stands at around ₹600 crore at present. The target is to achieve ₹1,000 crore in the next two years.
What are your plans for this? What is your strong rural model that is expected to give a big push to your growth?
Our strategy is to stay in vertical model for customer services, especially in the BFSI, retail and telecom sectors. About 17,000 staff are now based in urban areas.
The strategy will be to focus on tier-2 and tier-3 cities. The Centre as well as some State governments have big plans for these cities. The thrust will be on rural BPOs (with 2,000-3,000 people). The plan is to set up such centres at eight locations. We are looking at places where the Tata Group has significant presence. For example, in Jamshedpur (Tata Steel), Uttar Pradesh (Tata Chemicals) and Munnar in Kerala (Tata Tea) are some places where these BPOs can be set up.
At present, 20 per cent of our employees are in this segment. The aim is to grow it to 50 per cent over the next two-three years, which means more jobs in rural areas.
To scale up the business, we are talking to big corporates. The first outside the Tata Group is with GMR in Kakinada, Andhra Pradesh. There is good progress at the Kakinada SEZ with GMR Infra. This model will be replicated in eight-nine places, where GMR is strong, including in the Philippines.
What is the company doing to equip itself to tap the opportunities in the digital economy and age?
It’s an interesting situation we are in. Many of our clients are also clueless on how to handle the new-age consumers.
Social media, especially Facebook and Twitter, are having an increasing impact with the younger, urban youth who freely use them. It can change the way business is done. The tradition of customer calling the centre over the phone with a complaint is fast-changing.
Unless the response and fulfilment of customer demands is fast, you might end up facing a lot of flak on the social media, which then makes it more difficult to handle.
TBSS has made a conscious attempt to invest in acquiring specific tools that will help its clients in the digital world. This includes building strengths in business analytics and social media-based digital marketing services.
In the near future, we will also offer customer services to the end-users on social media. We are building teams with youth in their 20s to drive the social media strategy.
How far have your global plans crystallised? In fact, your US presence has diminished over time?
At present, international operations account for just about 10 per cent of revenues. We are looking at overseas acquisitions in the next year. There are three global clients (two in the US and one in the UK) serviced from Indian centres.
We will re-establish the base in the US, especially closer to the clients operations called proximity centres. Our target is to earn 30 per cent of total revenues from overseas operations in the next two years.