My Job Search and Trends in Industries

‘India is essential to us’

October 6th, 2008

MUMBAI: UK’s largest business process outsourcer, The Capita Group Plc, is betting big on the life and pensions business and on India.

The outsourcer, which was in the news earlier this year for having won a £722-m deal from Prudential against Tata Consultancy Services (TCS), is pursuing opportunities worth over a £1 billion in the life and pensions segment, Capita chief executive Paul Pinder said.

The Prudential deal has also doubled Capita’s India strength from 1,400 to 3,000 employees, and if the recent inauguration of its Pune facility is any indication, India is set to figure more prominently in its growth plans. Excerpts:

How do you see your India count growing?
About 20 years back, Capita was only 30-people organisation. Today, we are 32,000, and we are growing business at a 20 per cent compounded rate. We intend to continue to build on our growth in the UK market and I feel that India will grow considerably faster.

TCS won an $850-m deal with the Pearl Group some years back. Did you bid for that as well?
The deal that TCS won four years ago was actually the last big deal that we didn’t win. But we have Pearl as a client as well, and today, we are the biggest supplier to Pearl. The Pearl book is a very big. So actually, there are four different suppliers –TCS, Capita, Liberata, and UISL (Unisys Insurance Services Ltd).

We have something like 7-million policies that we administer, and TCS has something like 4 million. To put it in perspective, the Pearl Group recently acquired the whole of Resolution’s book.

Did the contract involve people transfer?
Yes, we got roughly 2,000 people. People transfer seems to be one of the ways you’ve grown…
Yes, 22,000 of our people have come to us through contracts or acquisitions. Manpower integration is a challenge, but its part of what we do. So hopefully, we’ve got good processes for it.

What was your most challenging contract?
The most ambitious contracts we’ve done are not where we take over an existing service or staff but greenfield contracts. Probably, the London Congestion Charging (LCC) contract because it was so new, so controversial, and had such high visibility.

What we had to do there was deliver 450 man years of service development effort in 11 months — very tight timelines with huge penalties if we failed. Nothing of that sort had ever been done before. You could either say we were very brave or slightly mad.

The LCC contract has now gone to IBM. So, are you seeing more competition from the likes of IBM?
Not actually. I can only think of two instances in our history where we’ve lost to IBM. One of the reasons why we’ve been successful is because we’re very disciplined about what we are prepared to do.

We will deliver a very high level of customer service but equally, we expect to run it so it is financially viable to us. In that particular instance, IBM had a strategy for wanting a worldwide traffic management business and therefore, they took a view that it added value to them from a marketing perspective.

In our 20-year history, we’ve renewed hundreds of contracts. We’ve failed to renew only in three separate cases, which are again when a competitor has taken a particularly aggressive pricing stance.
In today’s context, don’t you think undercutting will become more frequent?
We’ve seen a number of new entrants come into the market and do exactly what you said. Some of these players win, but they have to live with the consequences later on.

You seem pretty bullish about growth despite some of the recent events…

There are effectively three threads that drive Capita’s business. The first thread is that clients want to be sure that they get measurable improvement in service quality.

Second aspect that clients are looking for is contractual certainty that they are going to get a much cheaper service. So, in some of the contracts we are entering into, we’re actually contracted to save something like 30-35 per cent of costs over the term of the contract.

The third thing clients are looking for is to manage the contract in a way that it not only saves them money but also enhances the profitability of their business.

So, the financial drivers are not just about how cheaply we can do it, but what can we do to make our clients’ business more profitable. India enables us to deliver all three aspects, which is why it is absolutely essential to us.
Source: The Times of India

Entry Filed under: News