Amidst the economic slowdown and financial crisis in the U.S., WNS Global Services had quite a few announcements recently — a new center in Manila, appointing cricketer Malinga as Brand Ambassador, and acquisition of Call 24/7. A few days back, a report by
Dealogic clearly stated that the first quarter of 2008 saw the lowest volume of M&A deals in the last four years. Clearly, WNS bucked that trend.
Neeraj Bhargava, CEO, WNS Global Services spoke to Namita Goel about the potential impact of the slowdown and the acquisition of Call 24/7.
Amidst market slowdown, WNS Global Services is unusually active. Were you prepared in anyway?
An economic downturn typically leads to cuts in discretionary spending at first. We are typically not affected by such cuts, as very little of what we do can be classified as discretionary spending. However, in a significant recessionary environment, where our customers’ businesses are contracting, we could see some impact on the volumes of transactions handled by us. At this point, we see enough momentum in new business from existing and new customers to counter such reductions in customer transaction volumes.
What is your take on the recent slowdown?
Given the low penetration and proven credentials of the industry, we see a U.S. slowdown as an opportunity to accelerate growth over the next 18 to 24 months. While there might be some delays in decision making by customers during the current period of uncertainty, we see significant potential in the longer term. This is further validated by the recent Everest-Nasscom study that predicts a five-fold increase in India-centric BPO activity over the next five years.
With reports on low M&A activities, how will you benefit from this recent acquisition of Call 24/7?
This deal will help WNS for the following reasons:
First, this proves our firm standing in the U.K. market, as we were already a leading provider of auto-claims-processing and accident-management services in the country with our WNS Assistance business. This is an extremely synergistic acquisition that will allow both our WNS Assistance customers and Call 24/7’s customers in the insurance industry to benefit from added scale. Already one of the largest purchasers of auto repair services in the U.K., we will have additional negotiating power that will benefit our customers.
Secondly, this fits into our overall strategy of strategic acquisitions that adds new capabilities to our service offerings, provides us with new customers or additional economies of scale, or enhances our global-delivery capabilities.
Thirdly, Call 24/7 is a profitable business and we expect it to be earnings-per-share accretive within the first year.
Lastly, this acquisition is also important in the context of the Indian BPO industry — this deal, along with our recent expansions in Bucharest and most recently the Philippines showcases the ability of Indian firms to become true global industry leaders that utilize deep industry knowledge to partner with leading companies around the world.
