Headcount addition for business process management (BPM) services provider Hinduja Global Solutions (HGS) Ltd will remain flat in this financial year owing to uncertainty in the telecom sector. The firm may hire around 1,000 employees over the next fiscal.
According to CEO Partha DeSarkar, the domestic CRM (customer relationship management) business, which accounts for 14% of Hinduja Global's overall revenues, is struggling because of a drop in volumes from telecom clients. Around 70% of the company's domestic CRM business comes from the telecom sector.
Since Reliance Jio Infocomm Ltd's entry, the telecom industry is undergoing a data revolution. The sector has seen consolidation and the profitability has been affected due to lower margins and rising competition, resulting in high attrition.
DeSarkar said he does not see a large headcount addition in this financial year, and "on a net basis, the headcount will remain flat this year." The company has to downsize its business due to drop in volume, he added.
The Bengaluru-based company, part of the multi-billion dollar conglomerate Hinduja Group, has a high attrition rate of 60%, according to DeSarkar.
"That's a large number and we are not happy with that, but it is driven by what is happening in the telecom space," he said. As on June 30, Hinduja Global had 44,854 employees in seven countries.
However, over the next fiscal, Hinduja Global will see a capacity addition of around 1,000 employees at its two centres in Hyderabad (Telangana) and Jacksonville in Florida, DeSarkar said. The upcoming Jacksonville centre will cater to consumer electronics and healthcare clients.
The company's net profit fell 9% to Rs 40.28 crore during the quarter ended June 30 whereas revenue from operations grew 18.7% to Rs 1,100.83 crore. Total expenses increased 24.3% to Rs 1,027.68 crore due to higher costs in terms of its recent acquisition of AxisPoint Health and an increase in minimum wages in Karnataka.
In March, Hinduja Global Solutions acquired loss-making population health management company AxisPoint Health for $14 million in an all-cash deal.
DeSarkar said that AxisPoint was losing clients as its capacity utilisation has fallen "dramatically".
"We knew this is going to be a loss-making acquisition for a first few months," he added.
The company had also acquired a 57% stake in Element Solutions LLC, a digital consulting services firm, for $5 million. According to the CEO, Hinduja Global may look to increase its stake further depending on how the acquisition pans out.
"So far, it is doing well for us," he said.
While the domestic business is under pressure, the company will focus on healthcare and consumer businesses. It is also exploring geographies such as South America and South Africa for expansion.
TALENT WOES
- 44,854
Employed by HGS across seven countries as on June 30
- 60%
The rate of attrition
