How far have you been able to achieve the goals set for iGate?
We'd set out with a vision of an iTOPS (integrated technology and operations) strategy, which has been successfully implemented over the last one year. In fact, about 65% of our recent wins have happened in the banking and finance segment, which validates the success of this strategy. Out of the 11 clients we got in the first quarter of this year, 9 have been from F1000 companies. This helped the company turn profitable this year.

We have also moved the offshore-onsite mix from 40:60 to 67:33. This will help improve our margins significantly. We have built new practices such as ERP, IMS etc. based on IP and this has received a positive response in the market. I think we have done all the right things -- getting the physical infrastructure, the people and processes in place.

What is the concept of "BSP" that you are promoting? How is it different from the traditional BPO services?
As a BSP provider we take the inputs for a particular function or portfolio of functions from the client and deliver client-defined outputs using our own 'best-in-class' processes, people and technologies. Since a BSP provider hosts entire client functions, such as finance and accounting and insurance claims processing, it can choose to perform certain processes in lower-cost geographies, thus giving clients the benefits of offshore outsourcing without the accompanying transition risks.

BSP allows companies to make most costs variable, by offering a transaction-based pricing, or ‘pay-by-the-drink’ model. For example, in claims processing, a BSP company charges a fixed price per claim processed, as opposed to a traditional BPO where the client is billed by the hour, regardless of the number of transactions completed per hour.

Our pay-per-transaction and per-seat-basis model is different from what the industry is currently used to. With this offering, we are seeing growth in the market as well as some significant projects coming under our belt.

Many large IT services companies are expanding into the BPO segment by acquiring established players. What is your view on this approach?
I would think that this is a sound strategy for the most part. When a large company wants to get into a new sphere of operations, rather than starting from scratch, it makes sense to acquire a willing entity that is interested in merging into a larger behemoth. How this helps, is that not only does the required competency come in with the necessary experience within the existing organization, it also benefits the larger corporate structure as they are now able to offer a wider variety of offerings to their clients. So while existing work continues, which in itself is a small measure of a return on investment, there is the added incentive of bringing in existing or new customers from the acquiring party to add to the pie. Take the example of iGATE. When iGATE acquired Quintant back in 2003, the obvious benefit was the immediate merging of services into the iGATE framework. The acquisition gave iGATE a footprint into the fast-growing BPO space, and the integration of technology and operational capabilities to enable our evolution to a full services platform. It also strengthened iGATE’s presence in the financial services vertical

What is your opinion on the way the Indian BPO industry had performed so far? What would hold the future?
I think that the Indian BPO industry has gone as far as it can. We are now looking at a changing scenario where clients who have been outsourcing to India are sitting back to revaluate where they can derive more benefits through an ongoing reduction in costs. In the future, it is going to be all about increasing efficiencies in processes and technologies to maximize delivery to our clients. Clearly, our transaction based pricing model, will be the way of the future. This has already helped us bag substantial business, and it is also a clear differentiator for us. We are improving our process implementation and technologies being used, so we are able to capitalize on what I am calling the “second wave of offshorisation”.

What is this second wave of offshorisation all about? How do you see the market shaping?
As I just mentioned, there is a second phase of offshorisation trend in the market. Companies, which have already had a first-time offshoring experience, are now looking at offshoring from a more strategic point of view. A number of our key deals in the last six months have taken place because of this wave and in many of these we were competing with Tier I players.

The market looks strong. Total IT budgets of the Fortune 1000/Global 2000 companies are in the $250-$300 billion range. Customers who are spending about 6%-7% (about $18b-$22b) of the budget will look at spending 15%-20% ($50b-$60b). The market continues to look interesting and robust. There is heightened interest from US companies to do work out of India. Momentum in India for offshoring is strong now and the industry has matured.

What are iGATE's plans for expansion?
We currently have about 4000 people. We plan to add about 800-1000 professionals this year across our facilities in Bangalore, Chennai and Hyderabad. Our aim is to be at 40% Gross Margins by March 2007. Our focus over the next 12months will be to continue with our iTOPS strategy. Variabilisation will be the way of the future and I believe that as pioneers of the Transaction Pricing Model we will stand to benefit.