Retiring the PSPT Ticker

So People Support, after seeing its stock drop to $8 in July, agreed to be bought by Aegis BPO, for $12.25 a share. The $250 million transaction is supposed to close this October, when the Philippine-based company becomes another part of India's sprawling Essar Group, which is into such businesses as steel, oil, and mobile phones.

Whatever happened to creating "shareholder value" when PSPT rejected the $15 per share offer of IPVG?

Medical Fallout

There's always a downside. Here's one view of the human cost not carried on the balance sheets of India's mighty BPO industry.

There's mounting medical evidence that if people are forced to stay up night after night their biorhythms are disrupted and they are liable to pay a cost in terms of both physical and psychological health. Elevated pay isn't sufficient compensation for a heart attack brought on at 30. We can't drive young people into the BPO industry by painting a superficially alluring image of its rewards, then shrug and turn away when they face serious health issues. Experts are concerned that the brewing crisis could undermine India's economic boom, which has been driven to a large extent by the services sector. A study by the Indian Council for Research on International Economic Relations estimated that heart diseases, strokes and diabetes cost India $9 billion in lost productivity in 2005. They forecast this figure to grow to a whopping $200 billion in the next decade, with the IT sector predicted to be among the hardest-hit.

I won't be a pied piper singing the praises of the capitalism system, but the long-term view argues for us to have faith. When an industry's health woes become a big enough problem, the solutions will come. If entrepreneurs have set up bars catering to the graveyard shift workers -- blackened windows to simulate night even though it's noontime -- why can't a whole city be transformed? Interiors of buildings are now made to follow the daylight hours of countries halfway around the globe; why can't the district where the building belongs also follow those same hours? If the human body can't evolve to cope with altered circadian rhythms, why the environment will have to be reshaped. If we all live on borrowed time, why can't we advance that clock +12 hours?

Buy Now

Short items from Indian press reports that Infosys will buy the BPO operations of Philips Electronics NV. When it closes, it will be another item in the on-going rejigging of the BPO industry. Captive operations become part of independents. And operations that managers once thought vital or contained too many secrets to let outsiders peek at them now become outsource-able. What was it I heard at a cocktail party recently? In rapidly-changing businesses, there are no secrets. Just speed of execution.

India's second-biggest software-maker will be taking over all the costs of this acquisition, similar to the manner in which rival Tata Consultancy Services bought the operations of UK's Pearl Group insurers, the website reported. The acquisition will add to Infosys current BPO unit, which has close to 11,000 employees, providing the company with round-the-clock processing, the report
added.

Here's Times of India's take:

Infosys Technologies is said to be close to acquiring the finance and accounting BPO arm of Philips Global. The Philips arm has an employee strength of 1,500 globally, including a 500 strong force in Chennai. The other facilities are in Warsaw and Bangkok. The BPO arm is said to have assured revenues of $200 million spread over five years.

ePLDT's SPI Making Deals in India

Here's another little tidbit on the globalization front. SPI, a Philippine BPO owned by the nation's largest telecommunications company, is looking to buy Indian companies as it expands its presence in the subcontinent. In the meantime, Indian companies are scouting in SPI's backyard for suitable acquisition candidates in the race to bulk up and develop a full service line. Now which of the many BPO companies around today will become the household name in 2020?

Global healthcare, legal and publishing business process outsourcing company SPi is looking out for suitable acquisitions in India. Ernest L Cu, president and chief executive officer of the Philippines-headquartered Spi, said the company has allocated $50 million for mergers and acquisitions. The company is in talks with investment bankers and is considering several proposals, Cu said while addressing the media here on Wednesday. According to Cu, SPi plans to move its medical billing work to India from the US. He said the setting up of new delivery centre in Chennai and the cost differential between the US and India has made the company favour shifting of medical billing business to Chennai in eight months. The business has the potential to create 150 new jobs. SPi Technologies inaugurated its new 17,000 sq ft facility in the city on Wednesday. The 1,100-seat facility will house the company's publishing and healthcare business operations. The new centre will be the company's fourth in the country after Pondicherry, Coimbatore and New Delhi. Cu said the Indian company would increase its headcount by 700 by the end of this year. In 2003, SPi through its wholly owned Indian subsidiary SPi Technologies Private Ltd
acquired the Pondicherry-based Kolam Information Services Private Ltd, a book
publishing BPO. Two years later, it acquired the medical transcriptions business
of KG Information Services and Technologies Private Ltd in Coimbatore.

Bagging The Citi

Would you buy a business from a bank? Would you buy a business that is solely dependent on that bank? Citibank is close to a sale of its captive BPO, according to Indian press reports. The information asymmetry seems to favor Citibank, since who better knows the bank's prospects -- and the outsourcing potential going forward -- than itself.


If you're a buyer, it makes sense to pay the reported $1.2 billion price if you're confident you can cut costs in the unit faster or deeper than Citi thinks, and if you can use the Citibank BPO as a platform to acquire other bank customers. What better calling card than to say to future customers, "The largest bank in the world outsources to me."

Citigroup's BPO arm, Citigroup Global Services, is likely to find a new owner in a week. Surprisingly, big names like IBM, Infosys, TCS and Blackstone, which were in the race for the BPO firm, have fallen by the wayside, citing expensive valuations. The fight is now between half a dozen suitors comprising Genpact, First Source, WNS, 3i and a couple of private equity investors. Citigroup's BPO arm was recently put on the block and is likely to be valued around $1.2 billion. "The multiples are going to be pretty high here.

That means the buyers require to cough up anything up to $1.2 billion. Third party BPO firms in India are yet to have such deep pockets. Again, sinking large chunks of money upfront on a non-core cause may not be the right option for domestic IT services providers. That clearly leaves the game with big boys like IBM and monied PE guys who are willing to wait for ROI and capable of taking risk,'' says Pari Natarajan, CEO, Zinnov, a Silicon Valley-based offshore research and consulting firm.
For Genpact, the former captive unit of GE, this acquisition would reaffirm its leadership position in the country, while for WNS, acquiring Citigroup Global would give it a presence in the financial services sector. WNS, a legal service and financial services company, has made a few unsuccessful attempts to add financial services to its portfolio and is looking to make a splash by bagging this deal.First Source, on the other hand, is already a specialised player in the banking and insurance sector and the addition of the Citigroup's captive unit will bring them practices that banks usually don't outsource to third party players.

Half a Million Jobs

The Contact Center Association of the Philippines (CCAP) has a target: 500,000 gainfully employed in the industry by 2010. If this target is achieved, what will it do to the ecosystem that serves this industry? More Manila bars, open at noon, with dark curtains to shield the sun, so that graveyard shift workers can still feel like they're going out at night? More 7-11 and Ministop convenience stores with dine in facilities? More "We will give your accent an American twang" ESL (English as second language) centers? More healthcare workers trained to diagnose and treat "graveyard disease"?

Raffy David, CCAP director, said in a phone interview that industry estimates peg the total current industry workforce at around 200,000 workers.

Since call centers began setting up around the early part of the decade, the industry has been doubling its workforce annually but has tapered off in recent years due to concerns in the supply of skilled labor.

This is one of the perennial issues CCAP wants to address in an industry roadmap currently in development. CCAP plans to unveil this roadmap, basically detailing a strategy for the industry until 2010, in its annual conference this July.

"Since 2001, we've been trying to address perennial issues like HR, including poaching of agents, and promoting the Philippines abroad," said David, who also serves as CCAP director for membership.

Blackstone Flag to Fly in Philippines

A Reuters news story in the NYTimes website says Blackstone Group has bought Intelenet Global Services of India, teaming up with its management in an 80-20 venture. The buyout price was in the region of $200 million.

This marks the first foray in the industry for Blackstone. And such big boys with deep pockets don't usually stop at one deal. Rollup strategy, anyone?

The British bank Barclays and an Indian mortgage firm, the Housing Development Finance Corporation, said separately that they each were selling their holdings in Intelenet, without disclosing the price.

Intelenet plans to expand its operations in Britain and begin services out of the Philippines and Mauritius, said its chief executive, Susir Kumar.

RPO

We now live in the age of the derivative acronym. First there was BPO (business process outsourcing). Then there came KPO (knowledge process outsourcing). The new acronym popping up is RPO (recruitment process outsourcing), in which the person who interviews you is not even employed by the corporation that is hiring you.

Corporations have always used head hunters to find executive-level employees.
But now the search for lower-level workers has been outsourced as well. Companies are desperate for talent, and they can't always find it on their own. Staffing firms like Spherion (NYSE: SFN) and Korn/Ferry, along with consultancies like IBM and Accenture (NYSE: ACN), have all moved into the recruitment process outsourcing (RPO) business. They find candidates, root through résumés, do background checks and even conduct initial job interviews for jobs paying anywhere from $30,000 to $200,000 a year. And the candidates often don't even know that an outsourcer, rather than the company itself, is running the show. . . .According to research firm Gartner, the RPO business was worth $1.2 billion in 2006 and is growing about 8.6% a year. Some outsourcers, however, are seeing much faster growth. At staffing firm Spherion, the RPO business has tripled in the last 18 months and now tops $50 million annually. At 4-year-old firm The Right Thing business has been tripling every year. And the deals are getting bigger. Three years ago, the biggest recruitment process outsourcing contracts were worth $5 million, according to Jason Corsello, an analyst with the Yankee Group. Now, deals are often worth more than $30 million a year. That means someone at a call center in Manila might be interviewing you for your next job. Even if the recruiter is based in the U.S. or Canada, the entire process, until the final interview, may now be conducted over the phone and online. "Face time is not part of this business," says Lowell Williams, head of the human resources practice at EquaTerra, a firm that connects corporations with outsourcing partners. "You could definitely have a job interview with someone in India or China. It's going on all the time."

BPOing the HMOs

We've all heard about medical tourism -- rich country citizens traveling to poorer nations to have surgery, either critical or cosmetic, that they can't afford back home.
Here's the thought. If a consulting firm like Accenture can hire doctors in poor countries to shephard drugs through clinical trials, why can't it hire those same doctors to shephard rich-country patients to recovery?
In the U.S., HMOs were set up to deal with runaway health costs. Is the next stage in the battle against ever-rising medical costs offshoring the HMOs' work? As this online article suggests, the cost savings available to U.S. corporations with mounting health bills are just too huge to ignore:

In what could be the next big step in the outsourcing saga, big corporates in the US are planning to offshore their employee healthcare to India.
Wal-Mart hires over a million employees in the US – spending $8,000 on each employee's healthcare every year takes its total expenditure to a staggering $8 billion. What if Wal-Mart could save 90 per cent of that amount with help from us?
As health insurance gets painfully expensive in the US, huge cost advantages of medical procedures in countries like India are proving to be irresistible for companies there including those on the Fortune 500 list.
Mercer Health & Benefits Dr Arnold Milstein said, “We estimate that the price advantage for the most efficient Indian hospitals would be around 85 per cent to 90 per cent."
American companies are obviously feeling the heat. Many believe that unless they control the spiraling health expenditure their profits could start taking a serious hit by 2008.
A study suggests that outsourcing of health care can easily reduce the showroom price of a GM car by a thousand dollars – it's all very simple logic so what's the problem?

The First Gram is Always Free

There's a study out by Compact Management Consulting on how IT and BPO outsourcers deliver cost savings in the first year, and then ratchet up their prices in successive years, making them the costlier option for a company than if it kept the service in-house.

The research, based on an analysis of 240 deals worth more than £20m, found that outsourcing providers were pricing contracts to produce savings of up 18% compared with in-house costs in the first year. But costs then began to escalate, reaching 36% above comparable top quartile internal operations by year three. . . .

Simon Scarrott, head of business development and marketing at Compass, said: “With those figures, it is easy to see why the claim that all outsourcing will save money is a myth. There can be sound strategic reasons for outsourcing but saving money over the long term is not one of them.”

He added: “Outsourcing providers are not that different from an in-house operation. Indeed, they often use the same people as the in-house operation after the deal is signed and outsourcers cannot perform alchemy on a business process and turn an operation into gold.”

Hold on. There are significant savings involved if the business model is to arbitrage the labor costs between an expensive developed country's workers and the cheaper rates available in a developing country. So even if you are still using the same number of IT programmers, clerks, project managers, and customer representatives, there's no doubt the correct outsourcer can do it, cheaper.

Then again, even if you, the chief information officer of a fast-growing company, take the Compass study as gospel truth, you can always choose what Aviva has done -- get an outsourcer to build it for you so you can enjoy the first and second-year savings, and then take over the facility.

The previous month, Aviva transferred 1,600 employees in Bangalore from an outsourcing vendor, 24/7 Customer, to Aviva Global Services. It was the first move of its kind and size in the Indian business processing outsourcing industry, NASSCOM said.

When a vendor creates a call center for a company, runs it for a certain period of time, then hands the operation over to the company, it's called the build-operate-transfer (BOT) model. Typically, a company moving operations to India would build the operation from scratch, or subcontract the operation to an outsourcing vendor, or some combination of the two.

The BOT approach lets a company get going in India faster, Aviva executives said at the ceremony in Mumbai. That helps Aviva, and its Norwich Union insurance subsidiary, adapt to change, [Executive Director Patrick] Snowball said when he accepted the award.

"Our excellent operations in India are critical for us to ensure we maintain a competitive advantage," he said. Aviva has worked with three vendors under the BOT model: EXL, WNS and 24/7 Customer. Over the course of the year, 5,000 employees will be transferred from those vendors to Aviva's own offshore division. The Bangalore facility was just the first to be transferred. Later this year, the company will transfer facilities in Sri Lanka to its control, and in Pune.

73% Attrition

Can any business survive if three-fourths of its workers leave every year?

India's Economic Times has an article saying Wipro's worker attrition rate is 73% per year. Now the way Wipro calculates its "attrition rate" may inflate the headline number; the company includes persons the company had made a job offer but declined to join.

Even if the true figure is 25% a year, i.e. one out of every four jobs has a new face each year, it still speaks to the operational problems facing Wipro, and the rest of India's A-Team BPOs. Anyone care to be the HR director in an Indian BPO?

The business processing unit of IT bellwether Wipro has seen an annualised attrition rate of 73 per cent for 2006-07, a top company executive said today. The attrition rate included those who were given the offer letter for a job but did not join the organisation, Wipro BPO's Chief Executive T K Kurien told reporters after Wipro announced its financial results here. The annualised figures were calculated on the basis of 16.9 per cent in the fourth quarter of the fiscal 2006-07. During the quarter, voluntary attrition rate was 15.7 per cent. "Though the attrition rate has slowed down, a lot is still needs to be done on this aspect," he said. Outlining the reasons for attrition, he said one-third of those who dropped out were because of offers by competitors while another one-third quit to pursue higher studies. "One-third of those who left were those who had quit the industry as a whole. Women form a large part of this segment," Kurien said. The late night shift was a possible reason for women dropping out, he added. He said the company has started several programmes, including one-on-one meetings with employees to reduce the attrition of employees. Commenting on the high figure of 73 per cent as compared to rival figures, Kurien said it was because the measurement of attrition varied from company to company. Wipro BPO considered attrition right after the offer letter was handed over to the individual quitting the job, he said.

Media KPO

Who will be the first in the Philippines to provide outsourcing for America's television industry? According to televisionpoint.com, which tracks the Indian TV industry, Infosys is about to tie up with India's TV18 group to do production work and provide the technology backbone to make it easier to get the digital content we all crave.

The Philippine broadcast industry has the same untapped capabilities -- it's a matter of marrying it with someone who will have enough credibility among TV titans in the U.S. so that those services will be bought.

Sources said the TV18 group was in advanced talks with Infosys BPO and was in the process of finalising the management team that would head this venture. The size of the deal is unavailable, but according to company sources, the deal will involve use of the TV18 brand name and the technology and delivery capabilities of Infosys BPO. This will include rolling out online initiatives and creating technology platforms for high-definition content, digital content and projects that involve editing media-related content.

According to infotech analysts, Infosys BPO is increasingly focusing on getting more knowledge process outsourcing work. According to PricewaterhouseCoopers, the global media-entertainment industry is estimated at $1.3 trillion (India's GDP in the region of $800 billion) is and is expected to grow to $1,7 trillion by the end of 2009. Infosys is India's second largest infotech software services exporter. TV18, with interests in television and Internet business, runs four television channels including news and entertainment and about a dozen Internet portals spanning technology to travel.

Infosys 300 Seats

Here's Infosys BPO on the record saying their Manila facility will be up and running within six months.

Driven by a strong customer demand, Infosys BPO is planning to scale up its presence in Manila by setting up its own delivery centre soon. Infosys BPO currently has a tie-up with Ventus, the call centre company of Philippine Long Distance Telephone Co's (PLDT) unit ePLDT Inc.

"We are looking at setting up a 300-seat facility in Manila over the next two quarters," said Mr Amitabh Chaudhry, CEO and Managing Director, Infosys BPO Ltd. "The partnership with Ventus has worked well for us and we plan to continue with it," Mr Chaudhry said.

Infosys BPO plans to use the Manila facility to serve the US clients in both voice and non-voice processes. Mr Chaudhry said clients are more comfortable with getting serviced from the Philippines because of the availability of better skill sets, especially in areas of F&A (finance and accounting), the familiarity with the US GAAP standards and in customer relationship management.

Moreover, the Philippines has emerged as an ideal offshore destination for BPO firms because of the English fluency and familiarity with American culture. The Manila facility would also double up as a business continuity centre for Infosys BPO, Mr Chaudhry said

Take note of that other phrase peculiar to the BPO industry: "business continuity." The majors are all building in redundancy and reducing the risk that a single event can undermine their ability to do business. In a post 9-11 world (and nuclear-armed Pakistan and India), it's essential to doing business.

Coming Soon: Bosses from Bangalore

When your backyard is crowded, you need to go someplace else. The success of India in making the awkward term BPO an acronym we now all know has led to homegrown problems. While India sorts it out, in the meantime the greener pasture is the Philippines. Competition for Manila's best workers who can speak straight English with an American accent is intensifying, though the labor surplus in the Philippines is still large, so the runaway bidding for qualified workers isn't there -- yet.

Expect a few announcements from major BPO players within the year, according to India's Financial Express.

The wheel has come a full circle for the Indian business process outsourcing (BPO) sector with runaway wage inflation driving the who’s who in the domestic BPO world to look for low cost destinations such as the Philippines to scale up operations.
Leading the pack is the Infosys BPO, which has already set up shop in the Philippines in association with a local partner. The company is said to be planning to ramp up its presence there through an acquisition or floating a new facility. Other BPO players such as HTMT, IBM Daksh and GenPact are also ramping up their Philippines operations, industry watchers say.
“The challenge is real. For a tier-II player who needs to grow to graduate to tier-I, Philippines are an extremely attractive base to expand into. In 2007, we expect four to five deals involving large Indian players who are moving to that country,” he said, adding, “most of the investments there would be towards setting up support operations for primary facilities based in India.” Many BPOs are eyeing tier-II locations outside Manila and Makati in the Philippines to set up disaster recovery centres for Indian facilities, sources said.

Shortage

Is there a global labor shortage? Some think so. But mention that at any of the recruitment agencies in Manila, where men and women line up in the hopes of landing that overseas job, and you would be laughed at. Perhaps the shortage has to do with qualified skilled workers. You may know how to balance a balance sheet or troubleshoot a troubled network, but if you can't speak English, you can't join the BPO workforce.

At first, the flood of three billion new workers into the global marketplace for labor was a boon to employers across the globe. But cost cutting strategies, like offshoring and outsourcing work to low-wage countries, are running out of gas far sooner than many expected.
The salaries of IT workers from Central Europe to India are rising by double-digits every year. In the past five years, Hewlett-Packard (HPQ), SAP (SAP), and even Morgan Stanley (MS) have set up shop in former Communist countries of Eastern Europe. There, a deep pool of highly qualified math and science graduates were supposed to be willing to work for a third of that paid their Western counterparts.
Yet today, IT directors in Poland can cost companies more than $100,000 a year. That approaches Silicon Valley levels. And the number of highly qualified workers is surprisingly low. Multinationals have reacted swiftly, moving operations to ever lower-cost centers. Nokia, which already employs nearly 5,000 people in Hungary, recently announced that it is building a new handset factory in Romania.
This is all rather unexpected. Five years ago companies never thought they would have to worry about human resources. China and India were supposed to have seemingly inexhaustible pools of cheap labor. Yet today, the #1 challenge for multinationals setting up operations abroad is finding and keeping good workers.

The Global Labor Shortage: "The Saudi Arabia of Outsourcing"
India accounts for 65% of all IT work performed offshore. This is largely thanks to its seemingly limitless supply of low-cost engineers and other professionals. Yet, not all is as it seems. India produces 400,000 engineering graduates a year (five times as many as the United States) and a stunning 2.5 million university graduates overall. Yet only about a quarter of India's college graduates are up to snuff. The odds at top Indian companies are even worse. Some 1.3 million people applied to tech-services giant Infosys last year. Fewer than 2% of those were employable.
Graduates of non-elite schools suffer from weak English skills. The quality of faculty and courses is sub-par. In-house training programs for new recruits at top Indian IT services firms such as Infosys (INFY), Genpact, and Tata Consultancy Services fill some of the gaps. But by 2010, India will have a shortfall of 150,000 IT engineers and 350,000 business-process staff.

Out-Doing the Outsourcers

Business Process Outsourcing is the current jargon of choice to encompass an industry helping the Indian and Philippine economies modernize. Do you date yourself when you say the term should just be simplified to "supplier"? After all, does not Toyota Motors, the world's most valuable automaker, rely on outsiders to provide key parts for its machines? Nowhere in their lexicon do they refer to it as BPO/KPO. In the electronics industry, the term is contract manufacturing, such as Microsoft leaving it up to Flextronics to manufacture the hardware for its Xbox.

Now when you hear the name Accenture, the first thing that comes to mind is "consulting." Here's an interesting piece from BusinessWeek. You would not normally associate the name Accenture with the "d-word".

To see how Accenture is offering hard-to-match services, take a look inside the company's Life Sciences Center of Excellence in Bangalore. The sprawling office building houses dozens of medical doctors, PhDs, pharmacists, math whizzes, and statisticians. They work alongside biology grads to prepare clinical trial reports for the world's top drug companies.These high-skill employees—all of them Indian—coordinate closely with business consultants who are on site with clients around the world. Accenture consultants help clients revamp the way they handle the trials essential to getting new drugs approved by regulators. Once those processes are sharpened, Accenture software programmers in Bangalore design databases and algorithms for storing and analyzing clinical data. Accenture people distribute electronic forms to physicians who conduct the trials. Accenture's physicians review the data to spot errors and, when necessary, get on the phone with doctors conducting the trials. When all the data are collected, they analyze them for safety and effectiveness and write reports. All told, Accenture has cut the average time to prepare reports from six months to a few weeks. Each day saved is worth about $1 million to a drug company.

But just as important, one client, Wyeth Pharmaceuticals Inc. (WYE ), says it has been able to hand off huge chunks of work to a partner that can perform them even better than it can. "We are launching drugs that otherwise would have been held up by our inability to handle the work," says Robert R. Ruffalo Jr., Wyeth's president of research and development.

Of course, few businesses like to refer themselves as "suppliers" because of the connotation that what they are providing is a commodity. But anytime a business changes its value proposition to the customer from "doing things cheaper" to "doing things you could not do," that supplier becomes a powerful force -- and then the buyer wouldn't care what term is used.

C'mon, Aussie, C'mon

It's somewhat hilarious what some people will say as they face stiff competition for business. Some resort to FUD (fear, uncertainty, doubt) attacks. Australia's Sunday Telegraph writes about medical records for transcription being sent to India, Pakistan and the Philippines, where costs are half those in Aussie Land.

Lyndie Arkell, chief executive of the wholly Australian transcription service OzeScribe, described the quality of overseas transcriptions as "absolutely terrible".

"There is a large industry sending work to India because there are doctors who want cheaper transcriptions," she said.

"But they are violating privacy laws and disrespecting their patients' privacy. I don't think patients go to their doctors thinking their records are going to end up in India."

Mistakes and mix-ups in medical terminology are common among overseas transcribers who cannot understand Australian accents, she warned.

Examples included confusion between "hypo" and "hyper" and "perineum" and "peritoneum".

And so mate, only Aussies can understand bloody Aussie accents. No Sanjit or Rajiv or Jose could ever hope to understand the inscrutable Down Under Droll. Crikey.

The Shot Heard in Illinois

How much ammunition is left in the PLDT arsenal? They certainly have not been keeping their powder dry.

SPI, the wholly owned subsidiary of ePLDT Inc., which in turn is the wholly owned subsidiary of PLDT, said today it is spending at least US$44 million to buy Springfield Service Corp., a BPO assisting doctors in sending out bills and getting paid. Illinois-based Springfield adds 383 employees to SPI's headcount. Valuation is at 1.5 times forecasted revenue of $30 million in the year ahead. Last year, SPI spent $35 million for medical transcription company CyMed Inc. of Virginia, which had 2005 revenue of $19.6 million.

"The inclusion of Springfield's service offerings in our healthcare portfolio allows us to further strengthen our relationships with the more than 400 hospitals, multi specialty clinics and physician practices that we currently serve," said SPI CEO & President Ernest Cu.

You'll have to hand it to the SPI folks. They sold themselves for $135 million, and in less than a year have convinced their new master to open the checkbook for $79 million of additional spending. (No disclosure on the contingent liabilities building up on ePLDT's and SPI's balance sheets with respect to future payments. To eager bankers, take a number if you want to lend to the subsidiary of the subsidiary of the subsidiary. . . just make sure the loan guarantee you ask the parent is bulletproof.)

As the saying goes, "the time to strike is when the iron is hot," or as my Uncle Chot quipped: the purse strings are looser when the honeymoon is not yet over. Regardless of the envy competitors might feel of SPI's ability to use the balance sheet of mother PLDT (the Philippines' most valuable company with a market cap of $9.4 billion) to borrow and pay for its acquisitions, the BPO playing field is rapidly changing.

Buy, Buy, Buy

It may someday be common for a Filipino to have an Indian boss, as common as Indians reporting to American bosses. And as the BPO industry evolves in both countries, it will become common too for Americans to be reporting to Filipino or Indian bosses. In the race to grow, the homegrown champions of each country will be buying what they can't develop on their own, causing office workers in the India, the Philippines, and the U.S. will experience first hand what the phrase "flat world" means.

EXL is busy scouting for companies it can scoop up to bulk up, says India's Business Standard. Some are already on the acquisition trail: in 2006 ePLDT's SPI bought an American medical transcription company, while LiveIt, a unit of PLDT's cross-town rival Ayala Corp., bought Affinity Express of Chicago for $28 million.

EXL Service Holdings, an IT services provider, is on the lookout to acquire companies in Eastern Europe, the Philippines, South Africa and China. The company is looking to mitigate its risks by diversifying into delivery and support centres in other cheaper destinations and also offer capabilities to service clients from markets other than the US.

The acquisitions, in each of the geographies, could be in the range of $25-50 million in revenue and will add capabilities in the verticals such as research and analytics where EXL is already fast gaining ground. “We have almost $85 million in cash with the company and the ability to use stock options also lend us flexibility to do at least two of the acquisitions this financial year,” said Rohit Kapoor, president and chief financial officer of EXL.

For adding the voice-based services and clients, the company will look to the Philippines and in South Africa, EXL is on the look out for adding diverse business verticals to its BPO business. The company is also eyeing to service the domestic market. “Although the size of domestic BPO-ITeS market is nothing to boast about, but our international clients who have business in India have been talking to us to set up centres that will service the domestic markets.”

One Citi's Loss is Another's Gain

Citibank, the financial colossus with 327,000 employees scattered around the world, says it will eliminate 17,000 jobs and move 9,500 to lower-cost countries.

Citibank's Philippine operations (4,100 employees) already does the accounting backroom for the bank titan's Asian operations. What will Manila gain at the expense of New York? Here's how many Citibank employees in the Big Apple will get pink slips, according to the NYTimes:

Some of the biggest body blows in the cost-cutting effort will be felt in New York, where Citigroup is the largest private employer. About 1,600 jobs will be eliminated in the city, where Citigroup has 27,000 employees and its headquarters.

An additional 200 jobs will be lost in New York State, about 75 jobs will be cut in Connecticut, and a handful will be shed in New Jersey. The first pink slips have already been handed out.

Over all, roughly 8 percent of Citigroup’s 327,000 workers worldwide, from entry-level consumer bankers to senior executives in the investment bank, will be affected.

This from Citibank Philippines:

Citigroup Business Process Solutions provides BPO, Call Center and other IT and IT-enabled services to various Citigroup consumer group operations around the region supporting 3 key domains: Citiphone Banking, Credit Operations and Transaction Services.

In addition, three regional operations are located in the Philippines: Citigroup Business Services, the global financial and management reporting center and global payment services center supporting over 60 countries in Asia, Europe, Middle East and Africa; Citigroup Information Technology and Infrastructure Philippines; and a satellite office of the Asia Pacific Banking Institute.