Firstsource to let go of unprofitable contracts

by CXOtoday News Desk    Aug 08, 2013


With the current market slowdown really pinching service providers, Mumbai-based Firstsource Solutions too have been forced to rethink its business strategy. According to a report in the Hindu Businessline, the back-office service provider will not renew current contracts that are not adding to its revenues while also staying away from new businesses that will dilute its margins.

“The financial year will be devoted to consolidation of the company’s topline. We will focus on bottomline and margins and so we will rationalise customers which are not profitable,” its Chairman Sanjiv Goenka said at a recent news conference.

Starting last quarter, the country’s fifth largest BPO company, began conversations with existing clients on this front, the report stated.

“We have requested some of our clients for price hikes. In cases where clients have not agreed, we said that we would transition the work to some of our competitors who are doing working on the same account,” Rajesh Subramaniam, Managing Director & Chief Executive Officer, told the daily.

Earlier in March, Subramaniam told analysts that the company had terminated ‘couple of clients’ in its domestic business. In some cases, the company is continuing with the same client with some lines of business while exiting others.

Recently Firstsource reduced 416 seats during the quarter ended June 30, 2013, across its delivery centres in India. “We gave away some capacity in order to exit non profitable business in the cities of Coimbatore and Bhopal,” said Subramaniam. It also laid off 249 employees.

About 46 per cent of the company’s revenues were derived from the US, while UK and the rest of world accounted for 34 per cent and 20 per cent, respectively.