In conversation with Priyadarshan Mundhra, Co-Founder and Executive Director, eClerx Services Ltd

Excerpts from an interview with Priyadarshan Mundhra, Co-Founder and Executive Director, eClerx Services Ltd. wherein he talks about the impact of the pandemic, the current industry trends and the way ahead

What is your outlook on the Indian IT Business Process Management (BPM) industry? What are the emerging trends you are witnessing post the pandemic?  

Even though the pandemic brought a significant deal of uncertainty, BPM companies have still done relatively well with a smooth transition to working from home and no major impact to productivity or quality of work. India has done better compared to other countries, so the outlook is positive. The demand environment continues to be supportive due to industry growth drivers such as digitisation, supply constraints and inflation in client geographies, along with greater comfort with work from home and working virtually. So, I think the industry as a whole and eClerx Services included has weathered the pandemic pretty well and we anticipate this growth momentum to continue in the near term.

The company’s PAT for Q3FY22 came in at Rs 106.6 crore, exhibiting a growth of 50 per cent relative to Rs 71 crore recorded in Q3FY21. What factors have contributed the most to help you outperform?  

For the last few years we have focussed on select sub-services for each of our businesses where we believe we have a stronger right to compete and to win. These are essentially the deep-domain-led services we have invested in, embedding analytics and intelligent automation in those offerings, investing in quality of talent and potentially a different commercial model with clients. In the last few quarters, more than half of our new sales are coming from these 5-6 different service areas across the three businesses. So, for example, in financial markets, a lot of that work is around client lifecycle and institutional KYC compliance.

In our customer operations business, it’s around optimising the omni-channel customer experience. And, in our digital business, I would say it is mainly around running a client’s e-commerce presence and partnering in their digital transformation. Additionally, I think the industry-wide trends such as effective remote working and employment market challenges in the West continue to provide strong demand momentum. The profit expansion was a natural outcome of this strategy and the supportive environment where we could build scale in fewer things and optimise with the help of technology and offshore resources.

You acquired Personiv, another offshore delivery-based BPM company in December 2020. What have been the key synergistic benefits to eClerx Services from the acquisition over the last one year?

One year into the deal, the progress on cross sales has definitely been better than what was originally anticipated. With Personiv there are three deals that we have already closed where services have been sold to eClerx Services’ clients and the delivery is happening, at least in part, from Personiv’s facilities, both in India and in the Philippines. There is another deal where eClerx Services is helping with some aspects of the technology backbone required to deliver those services. We also have a number of discussions that are still in progress, so we are hopeful on that.

What are your growth levers and where do you see eClerx Services in the next five years?

We have been investing in productized services and these are areas in which we are developing deeper skills. Technology is another important skill-set that’s required as you run along the automation journey. If I look at the absolute dollar amounts of revenue that we have added organically over the past four quarters, it’s accurate to say that it’s the most in any four-quarter period in our history and there is reasonably healthy demand across the board. On the way ahead, I look at the growth that we have enjoyed over the last few quarters, and it doesn’t feel like that there is any one deal or something very one off creating that growth. The growth has been broad-based with a number of deals across multiple clients in all of our three businesses and we believe that there are growth levers in each of our three businesses to drive growth for the next five years. 

What is your earnings’ outlook for the medium term?  

We remain confident of having decent growth in the near to medium term since the pandemic has accelerated digital transformation across all sectors. The demand environment looks supportive and we expect client roll-offs to remain around the prevailing low levels. We are optimistic that higher growth and operating leverage due to focus in service areas will lead to earnings’ growth in line with revenue growth in the medium term.