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For any CEO, grappling with a problem of plenty is better than facing a crisis of shortage. But when the same CEO heads a listed company, he has to balance a lot many interests than just his company’s. Genpact CEO Pramod Bhasin is in the midst of that tangle. He met BW’s Sunny Sen and Rajeev Dubey at his office to answer how he is dealing with the recession, resurgent competition from IT rivals and needs of his stakeholders.

What about the money in your balance sheet?

We want to buy something.

You have been unlucky with acquisitions in the past...

I don’t know whether we have been unlucky or very lucky. We are very careful buyers. Don’t listen to the world because the world does not have any clue.

What went wrong in the two deals—UBS and WNS?

We are very careful buyers and I won’t comment on the specifics. But we buy for value and we buy at the right price.

So the price wasn’t right...

I am not going to comment on those two (deals). There are very few deals that have gone by which we regret not having done. And we are in no hurry. We will do the right deal at the right time.  Fifty per cent of acquisitions go wrong.

What do you consider when you are looking at an acquisition?

Ideally, there are 3 or 4 characteristics. It can add to our current product line.  It can bring in a new customer base to us.  It has offshore ability and therefore enhance EBITDA.  It brings in a great management team.  We are not interested in fixing anything.  And it brings cultural synergies. This is what we look for.

So you won’t have looked at Satyam?

No, but Satyam didn’t need fixing.  As you see now it needs fixing right at the top, otherwise it is a great company. It is a solid company. We didn’t want to be an IT company. We are just very clear on that.

Suddenly there is a surge in expanding geographies, so how does that boil down to the Indian BPO business?

Firstly, we don’t think of ourselves as an Indian BPO business. Our shareholders are overseas. We are a public-listed company in New York. I have an Indian passport, but that does not mean I will do business only in India. And I have already told in my office and publicly that the day China is better, we will move there. I think India will be fun in medium-term.  In long-term, India will face threats. Philippines is winning in the voice side. Voice is not that big for us, only 10-15 per cent of our business.

Geographically you don’t see any significant threat except for China?

Philippines is a bigger threat and it is winning. With its infrastructure, it is like any suburb of America.

What’s your presence like in Philippines?

Not huge, about 2,000 people ...  but growing.   But we do voice here also. Collections we do here. India to India business we do here. Those things are working out for us here pretty well. Out there it is more of financial services, high-end voice work. F & A work will also increase there. The government is very helpful   and offers good tax break.  The infrastructure is good, training is available and people are enthusiastic.

What about China?

I don’t know quite how it will work. On the product side, yes.  They have a huge focus on products. Secondly, China had announced they were going to build 10 cities which will be IT and services hubs. They are teaching English at school level. And if the government is determined, they would put a lot of incentives and subsidies for the industry to succeed.

What about European locations?

They don’t have the population but they will occupy their own unique niches. They will handle multiple European languages. Latin America will handle Latin America, Spanish and Portuguese.  All of us are into those areas to serve the domestic market and are not just offshore destinations. We will expand in Brazil this year because we want to serve Brazil. We went to China 10 years ago, because we wanted to serve China.  Egypt will be for Middle East.

There have been reports of Oak Hill Partners and General Atlantic exiting...

There are lots of reports. Full denial, doesn’t matter. They are long-term investors and they are very happy. They want liquidity at various times, but they don’t want to sell off everything.

The BPO industry is going through a lot of change but what is that which is making this change interesting?

This change is interesting time because of 4 or 5 reasons. First, because this is a time of recession.  Second, this realignment will fuel growth in the future. Third, this is the natural evolution of what is fairly a very small industry. Changes will happen from time to time till it reaches some national evolution points.  Last, because of increasing global competition. All are every important trends.

Ironically, at the time of recession what you see is when you expect companies to move faster they actually slow down. Because of their own restructuring, cost cuts, markets, etc and consequently we all saw a downturn. We saw reduction in growth rates, but not a downturn. One thing we are very proud of the fact that is such a situation as many IT companies tend to have a negative growth rate we would grow at a 6 per cent to 10 per cent.

Conversion of dollars to rupees and back to dollars, makes a huge impact. One should convert at a constant currency. Emergence of services as a product line and globalisation of services is now happening at a faster pace. The buying and selling of services like manufacturing products has already started. In our segment, we will increasingly represent global services as delivered by a bank. That’s what we will become over a period of time. And increasingly the world will be heading in that direction. Globalisation of services as a trend will continue at least for the next 5 years.

A look at Nasscom-McKinsey’s 2020 will show you that business services  --  and I call that business services rather than business process outsourcing -- market will grow faster than IT. And it will continue to grow faster than IT and 80 per cent of the growth will come from new segments like public services, government services, healthcare, SME etc.  So the medium- to long-term prospect for this looks good. And I think increasing acceptability of this industry -- as in the past we had to go through with the US customers -- is something we will go through with emerging economies like India and China.  We have done it for people all over the world. We have the best practises. I think that is going to be the trend in emerging economies. For them, managing growth is going to be important.