India's ICICI OneSource to expand into China, Vietnam

Indian outsourcer ICICI OneSource plans to expand into China and Vietnam over the next two years as its multinational customers set up operations in these countries, a company executive said.

The business-process outsourcing (BPO) company may also look to China and Vietnam as alternative delivery locations to India as costs in that country rise, said Raju Venkatraman, president and chief executive officer of ICICI OneSource.

India's outsourcing industry faces growing costs of staff and high staff attrition. Some Indian software outsourcing companies have said that they are considering expanding into China, both to support their customers' operations there and to use Chinese manpower to service customers worldwide.

Because of India's poor infrastructure, BPO companies in India have to pick up the bills for captive electricity generation, higher telecom costs, and transporting employees to and from work, Venkatraman said. These costs add up to more than 20% of the total costs of a BPO operation in India, and are far higher than in China or Vietnam, he added.

The company will establish 500- to 1000-seat operations in China and Vietnam initially, Venkatraman said. Typically, the company would set up in these locations for an "anchor customer" and then expand the facility to service additional clients.

ICICI OneSource is India's fifth-largest independent BPO company. A large number of BPO operations in India are subsidiaries of multinational companies like IBM and Accenture.

ICICI OneSource is also establishing a delivery center in the United Kingdom as part of a contract it bagged from an undisclosed customer there. The company gets 50% of its business from the United States and the rest from the United Kingdom. It has a delivery center in the United States.

The company had revenue of $124 million in its fiscal year to March 31 this year and employs a staff of 8,000 people. It focuses on the banking and financial services, telecom, and healthcare industries.

Copyright © 2006 IDG Communications, Inc.

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