EXL’s growth will be driven by insurance, healthcare, analytics: CEO Kapoor

The year 2013 was a challenging one for Nasdaq-listed EXL Service Holdings. The Travelers Indemnity Company, one of EXL’s US-based clients, terminated an offshoring contract after some of the vendor’s employees violated confidentiality policies.

Some company employees, who have since been terminated, had shared a procedural document externally. Insurance company Travelers accounted for 9.6 per cent of EXL’s total revenue for the quarter ended September 2013. Though growth slowed down, the back-office company has moved on since the episode. In a free-wheeling chat with Business Line , Rohit Kapoor, Vice-Chairman and Chief Executive Officer, talks about how EXL has strengthened its internal controls and projects the way forward for the company. Edited excerpts.

Nasscom has predicted that 2014 will be a better year than 2013 for the Indian IT and back-office sectors. Do you expect EXL to grow in line with Nasscom estimates of 12-14 per cent growth?

In 2014, we will be transitioning out of two of our clients (Travelers Indemnity Co and another client). Another factor that will affect us this year is the currency exchange rate. Our guidance to the street is that we will achieve annual revenue of $480-500 million and we are pretty much on track. Typically, we look at growth over a 3-5 year horizon as our sales cycles are longer and our large multi-year deals take time to ramp-up.

Which verticals or industry segments would lead the charge for your company this fiscal?

Going forward, we see a large chunk of growth coming from principally three areas. First is insurance which contributed to approximately half of our revenues in 2013. The insurance sector has been traditionally conservative, but we see tremendous growth opportunities as more insurers get comfortable with the idea of using third party service providers. The second big area of opportunity is analytics, which is growing with more companies looking to big data and analytics-driven insights to drive growth. We are early movers in this space having invested in building our capabilities over the last eight years. We expect this to be a high growth business over the next three years. The third big area is healthcare. With the implementation of the “Obamacare” legislation, most companies in this space are looking for third party providers. We entered this vertical only three years ago and it already accounts for a significant portion of our business.

EXL has been aggressively hiring top talent from premier institutions such as Indian Institute of Management (IIM)-Kozhikode and Indian Institute of Technology (IIT)-Roorkee…

Our clients see us as partners who can help them drive business growth and change their business model. Today, our industry has moved from transactional processing work to providing end-to-end business process solutions. Such solutions call for application of analytics, automation, workflow technology tools and more importantly domain knowledge. Hence, we require a broad range of skill sets in the areas of consulting, statistics, software development, people management, project management and business re-engineering. So, we hire 30-40 graduates from IIMs and approximately 100 from IITs every year.

In 2013, EXL lost a key client — The Travelers Indemnity — due to breach of confidential data by a few of your employees. What has the company done to prevent such episodes?

Post the episode, we did a lot of work in the areas of information security and information lifecycle management. We hired third party consultants to beef up our processes and internal controls.

The company has invested in acquiring technological tools that can prevent data leakages. We partnered with the Everest Consulting Group to define certain standards for marketing.

We hope to be able to share this framework with other organisations and industry forums so that it can become a practice in the sector. In addition, we created a self-administered code of conduct for employees.

The company has laid down what constitutes client confidential information and how to deal with it.

Which other countries is EXL expanding its delivery footprint in?

We have expanded our presence into South Africa where we now have a legal entity. At EXL, we only look at global businesses and do not focus on domestic clients at all. So, even from South Africa we are working for international clients. In India, we added Mumbai to our delivery footprint in the quarter gone by. In the Philippines, we are establishing new facilities in Cebu and Alabang that are expected to go live within the next few quarters.

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