India's ICICI OneSource Expanding into China, Vietnam

Follows multinational customers to new locations

John Ribeiro

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

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 operating officer of ICICI OneSource.

India's outsourcing industry is already up against 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 also 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 telecommunications costs, and transporting employees to and from work, Venkatraman said. These costs add up to over 20 percent 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 Corp. and Accenture Ltd.

ICICI OneSource is also establishing a delivery center in the U.K. as part of a contract it bagged from an undisclosed customer there. The company currently gets 50 percent of its business from the U.S. and the rest from the U.K. It has a delivery center in the U.S.

The company had revenue of US$124 million in its fiscal year to March 31 this year, and employs 8000 staff. It focuses on the banking and financial services, telecommunications, and health care industries.