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Takeaways from management meet We met Mr. Abraham Mathew, CFO – Infosys BPO, and Mr. Haragopal, Head – Finacle in Infosys Bangalore campus. Here are the key takeaways from our meeting:
• Vision 2020: Infosys has a vision of becoming $20 bn enterprise by 2020. BPO and Finacle, both divisions hope to contribute at least 10% to the topline.
• Accelerating growth in BPO: Infosys BPO has underperformed company growth since financial crisis, but is expected to over perform after FY12, on back of account mining and growth in realization.
• Verticalized presence: BFSI (32%), Manufacturing (39%) and CSP (16%) growing verticals.
• BPO clients expanding: The total number of clients stands at 94. Top client contributes 14.8%, top5: 35% and top10: 46%. With more services and bundling of services by Infosys, BPO is getting more clients.
• BPO climbing up the value chain: Voice based processes, which was 25% a year back, is just 15% now. The company has also built dedicated BPO platforms in areas like BPO, HRO etc, implying that the company is now working at higher end of the value chain and can revise its billing rates upwards, leading to higher realization per employee.
• Rise and Rise of Finacle: Finacle is expected to grow by 30% YoY in FY11. It is now servicing nearly all kind of banks, from large to mid cap, from urban to rural etc. It is expected to clock around $300 mn in FY11.
• Investments in R&D: Since Finacle is R&D based business, Infosys redeploys 20% of its Finacle revenues back into R&D. This is to keep updating the versions and release new modules continually.
• Success stories: Rural and Mobile Banking, since their launch 6 quarters back, have become big success stories.
Takeaways from management meet We met Mr. Abraham Mathew, CFO – Infosys BPO, and Mr. Haragopal, Head – Finacle in Infosys Bangalore campus. Here are the key takeaways from our meeting:
• Vision 2020: Infosys has a vision of becoming $20 bn enterprise by 2020. BPO and Finacle, both divisions hope to contribute at least 10% to the topline.
• Accelerating growth in BPO: Infosys BPO has underperformed company growth since financial crisis, but is expected to over perform after FY12, on back of account mining and growth in realization.
• Verticalized presence: BFSI (32%), Manufacturing (39%) and CSP (16%) growing verticals.
• BPO clients expanding: The total number of clients stands at 94. Top client contributes 14.8%, top5: 35% and top10: 46%. With more services and bundling of services by Infosys, BPO is getting more clients.
• BPO climbing up the value chain: Voice based processes, which was 25% a year back, is just 15% now. The company has also built dedicated BPO platforms in areas like BPO, HRO etc, implying that the company is now working at higher end of the value chain and can revise its billing rates upwards, leading to higher realization per employee.
• Rise and Rise of Finacle: Finacle is expected to grow by 30% YoY in FY11. It is now servicing nearly all kind of banks, from large to mid cap, from urban to rural etc. It is expected to clock around $300 mn in FY11.
• Investments in R&D: Since Finacle is R&D based business, Infosys redeploys 20% of its Finacle revenues back into R&D. This is to keep updating the versions and release new modules continually.
• Success stories: Rural and Mobile Banking, since their launch 6 quarters back, have become big success stories.
Infosys BPO
• Presently contributing 7% to Infosys’ revenues ($420 mn out of $6 bn+ in FY11), Infosys BPO has EBITDA margin of 26.6% and EBIT margin of 22.2%, as compared to company margins of 30.2%. In Q3FY11, EBIT margin further declined to 21.1%. Non-voice projects constitute 85% of the business and voice based processes 15%. This proportion is likely to stay at this level going forward.
• Prominent industry verticals are BFSI: 32%, Manufacturing: 39%, CSP (Communications Service Provider, Telecom): 16%.
• Infosys BPO has 94 customers, with largest contributing 14.8% (~1/6th of revenues: concentration risk), top 5 customers 35% and top 10 customers 46%, implying that ‘tail is long’ (large number of small customers).
• Average revenue realization per employee (revenue productivity/ employee): $31,695/ man-year. As BPO is scaling up its operations and rising up the value chain, billing rates are expected to go up, leading to improvement in realization.
• Infosys BPO had 18,825 people on board by end of Q3FY11, out of which 1,400 were engineers. Most of the people are graduates having done their B. Sc., B. Com., or BBA course.
• In Q3FY11, utilization stood at 75.7% (excl. trainees) and 73.8% (incl. trainees). Attrition stood at 40.5% on LTM basis (much higher than company average of 17.5% and in-line with industry average). Freshers form 90% of the workforce, leading to higher attrition.
• North America contributes 51% to the revenues, Europe 36%, India 6% and Rest-of-the-Word 7%. Karnataka govt. Income Tax department is a major client of Infosys. Infosys has invested `1,000 mn in the project, which includes consulting, ADM, systems integration, hardware and BPO. Annual revenue run rate from the project will be $5 mn, and Infosys BPO’s share would be 10%.
• Infosys has a vision of becoming a $20 bn enterprise by 2020, out of which Infosys BPO hopes to contribute $2 bn (10% of the business), requiring that Infosys BPO grows by a CAGR of 35%. Currently Infosys has penetrated 612 clients in Global 2000 companies list. It has 12 accounts of size $100 mn or more. The company has a vision of having 100 accounts of size $100 mn or more. This itself will translate to $10 bn+.
• Infosys BPO has underperformed company average growth, since BPO market has been slower post the financial downturn. However, on long
term basis, BPO and Infra Management businesses are expected to grow faster than the company average. Till FY12, they are expected to lag the company average. In FY13, Infosys BPO hopes to achieve company average rate of growth.
• Infosys BPO has dedicated platform offerings in the following fields: a) F&A (SAP based), b) HRO (Oracle Peoplesoft based), c) NewsSource2Pay (a newspaper publishing platform, SAP based), d) S2P (Source To Pay, a payment procurement, accounts payable platform, SAP based). Infosys also has non-BPO platforms, most prominent being Finacle. Other such platforms are Flypp and Infosys iEngage, both of which are used to service telecom clients.
• The company makes 4% of revenues through onsite services, which is mostly at the start of the project during times of process migration etc.
• Infosys BPO has offices in Bangalore, Gurgaon, Pune, Jaipur and Chennai. It also has overseas offices in Guangzhou (China), Philippines, Brazil, Poland, Mexico and Czechoslovakia.
Finacle Finacle is fast becoming another Infosys success story. Its clients range from Indian to foreign banks, from Tier I to Tier IV players. It has different modules like retail banking, internet banking, corporate banking, treasury, wealth management (Finacle advisor), analytics, Islamic banking, rural banking etc. Revenue streams are licensing, professional services, implementation and annuity. Annuity, which is like Annual Maintenance Contract, forms 15% of the revenue.
• The division has expanded from $48 mn profit in Q3FY10 to $84 mn profit in Q3FY11. Revenue, which was $118 mn in FY07, swelled to $208 mn in FY10. It has been $209.5 mn in 9m-FY11, suggesting a YoY increase to at least 30% in FY11. The business is growing by a CAGR of more than 26%.
• Core banking platform version has shelf life of 7 years while selling life of 3 years. Internet banking platform version has shelf life of 3 years while selling life of 1.5 years. Mobile banking platform version has product life of 3 years, while selling life of 1 year.
• Finacle is R&D based business. 20% of the revenue is plowed back into the business. The pre-investment EBIT margin is more than the company average of 30.2%.
• Finacle has not lost a single client till now. It won 14 deals in FY09, 31 in
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Takeaways from management meet We met Mr. Abraham Mathew, CFO – Infosys BPO, and Mr. Haragopal, Head – Finacle in Infosys Bangalore campus. Here are the key takeaways from our meeting:
• Vision 2020: Infosys has a vision of becoming $20 bn enterprise by 2020. BPO and Finacle, both divisions hope to contribute at least 10% to the topline.
• Accelerating growth in BPO: Infosys BPO has underperformed company growth since financial crisis, but is expected to over perform after FY12, on back of account mining and growth in realization.
• Verticalized presence: BFSI (32%), Manufacturing (39%) and CSP (16%) growing verticals.
• BPO clients expanding: The total number of clients stands at 94. Top client contributes 14.8%, top5: 35% and top10: 46%. With more services and bundling of services by Infosys, BPO is getting more clients.
• BPO climbing up the value chain: Voice based processes, which was 25% a year back, is just 15% now. The company has also built dedicated BPO platforms in areas like BPO, HRO etc, implying that the company is now working at higher end of the value chain and can revise its billing rates upwards, leading to higher realization per employee.
• Rise and Rise of Finacle: Finacle is expected to grow by 30% YoY in FY11. It is now servicing nearly all kind of banks, from large to mid cap, from urban to rural etc. It is expected to clock around $300 mn in FY11.
• Investments in R&D: Since Finacle is R&D based business, Infosys redeploys 20% of its Finacle revenues back into R&D. This is to keep updating the versions and release new modules continually.
• Success stories: Rural and Mobile Banking, since their launch 6 quarters back, have become big success stories.
Takeaways from management meet We met Mr. Abraham Mathew, CFO – Infosys BPO, and Mr. Haragopal, Head – Finacle in Infosys Bangalore campus. Here are the key takeaways from our meeting:
• Vision 2020: Infosys has a vision of becoming $20 bn enterprise by 2020. BPO and Finacle, both divisions hope to contribute at least 10% to the topline.
• Accelerating growth in BPO: Infosys BPO has underperformed company growth since financial crisis, but is expected to over perform after FY12, on back of account mining and growth in realization.
• Verticalized presence: BFSI (32%), Manufacturing (39%) and CSP (16%) growing verticals.
• BPO clients expanding: The total number of clients stands at 94. Top client contributes 14.8%, top5: 35% and top10: 46%. With more services and bundling of services by Infosys, BPO is getting more clients.
• BPO climbing up the value chain: Voice based processes, which was 25% a year back, is just 15% now. The company has also built dedicated BPO platforms in areas like BPO, HRO etc, implying that the company is now working at higher end of the value chain and can revise its billing rates upwards, leading to higher realization per employee.
• Rise and Rise of Finacle: Finacle is expected to grow by 30% YoY in FY11. It is now servicing nearly all kind of banks, from large to mid cap, from urban to rural etc. It is expected to clock around $300 mn in FY11.
• Investments in R&D: Since Finacle is R&D based business, Infosys redeploys 20% of its Finacle revenues back into R&D. This is to keep updating the versions and release new modules continually.
• Success stories: Rural and Mobile Banking, since their launch 6 quarters back, have become big success stories.
Infosys BPO
• Presently contributing 7% to Infosys’ revenues ($420 mn out of $6 bn+ in FY11), Infosys BPO has EBITDA margin of 26.6% and EBIT margin of 22.2%, as compared to company margins of 30.2%. In Q3FY11, EBIT margin further declined to 21.1%. Non-voice projects constitute 85% of the business and voice based processes 15%. This proportion is likely to stay at this level going forward.
• Prominent industry verticals are BFSI: 32%, Manufacturing: 39%, CSP (Communications Service Provider, Telecom): 16%.
• Infosys BPO has 94 customers, with largest contributing 14.8% (~1/6th of revenues: concentration risk), top 5 customers 35% and top 10 customers 46%, implying that ‘tail is long’ (large number of small customers).
• Average revenue realization per employee (revenue productivity/ employee): $31,695/ man-year. As BPO is scaling up its operations and rising up the value chain, billing rates are expected to go up, leading to improvement in realization.
• Infosys BPO had 18,825 people on board by end of Q3FY11, out of which 1,400 were engineers. Most of the people are graduates having done their B. Sc., B. Com., or BBA course.
• In Q3FY11, utilization stood at 75.7% (excl. trainees) and 73.8% (incl. trainees). Attrition stood at 40.5% on LTM basis (much higher than company average of 17.5% and in-line with industry average). Freshers form 90% of the workforce, leading to higher attrition.
• North America contributes 51% to the revenues, Europe 36%, India 6% and Rest-of-the-Word 7%. Karnataka govt. Income Tax department is a major client of Infosys. Infosys has invested `1,000 mn in the project, which includes consulting, ADM, systems integration, hardware and BPO. Annual revenue run rate from the project will be $5 mn, and Infosys BPO’s share would be 10%.
• Infosys has a vision of becoming a $20 bn enterprise by 2020, out of which Infosys BPO hopes to contribute $2 bn (10% of the business), requiring that Infosys BPO grows by a CAGR of 35%. Currently Infosys has penetrated 612 clients in Global 2000 companies list. It has 12 accounts of size $100 mn or more. The company has a vision of having 100 accounts of size $100 mn or more. This itself will translate to $10 bn+.
• Infosys BPO has underperformed company average growth, since BPO market has been slower post the financial downturn. However, on long
term basis, BPO and Infra Management businesses are expected to grow faster than the company average. Till FY12, they are expected to lag the company average. In FY13, Infosys BPO hopes to achieve company average rate of growth.
• Infosys BPO has dedicated platform offerings in the following fields: a) F&A (SAP based), b) HRO (Oracle Peoplesoft based), c) NewsSource2Pay (a newspaper publishing platform, SAP based), d) S2P (Source To Pay, a payment procurement, accounts payable platform, SAP based). Infosys also has non-BPO platforms, most prominent being Finacle. Other such platforms are Flypp and Infosys iEngage, both of which are used to service telecom clients.
• The company makes 4% of revenues through onsite services, which is mostly at the start of the project during times of process migration etc.
• Infosys BPO has offices in Bangalore, Gurgaon, Pune, Jaipur and Chennai. It also has overseas offices in Guangzhou (China), Philippines, Brazil, Poland, Mexico and Czechoslovakia.
Finacle Finacle is fast becoming another Infosys success story. Its clients range from Indian to foreign banks, from Tier I to Tier IV players. It has different modules like retail banking, internet banking, corporate banking, treasury, wealth management (Finacle advisor), analytics, Islamic banking, rural banking etc. Revenue streams are licensing, professional services, implementation and annuity. Annuity, which is like Annual Maintenance Contract, forms 15% of the revenue.
• The division has expanded from $48 mn profit in Q3FY10 to $84 mn profit in Q3FY11. Revenue, which was $118 mn in FY07, swelled to $208 mn in FY10. It has been $209.5 mn in 9m-FY11, suggesting a YoY increase to at least 30% in FY11. The business is growing by a CAGR of more than 26%.
• Core banking platform version has shelf life of 7 years while selling life of 3 years. Internet banking platform version has shelf life of 3 years while selling life of 1.5 years. Mobile banking platform version has product life of 3 years, while selling life of 1 year.
• Finacle is R&D based business. 20% of the revenue is plowed back into the business. The pre-investment EBIT margin is more than the company average of 30.2%.
• Finacle has not lost a single client till now. It won 14 deals in FY09, 31 in
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