WNS Global Services group CEO Keshav R. Murugesh explains to Rajeev Dubey why, despite similarities between BPM and IT services, never the twain shall meet.
BPM companies are doing more end-to-end work like IT services and the latter are doing more and more BPM. Will they be one and the same in a few years?
IT services is a very different business. Larger IT services companies are $8-10-15 billion. Their BPM component is $300-400 million, most of it through acquisitions. The largest pure play BPM is arguably $1.5 billion, including a couple of large acquisitions. Why is it that standalone BPM is relevant? First, in terms of integration between IT and BPM, in terms of risk, no client would want to provide all IT and BPM to one vendor. Second, for IT services there is only so much attention they can give to a $300-400 million division. They use BPM defensively while they try to sell more IT. Third, IT services deliver mid-40s gross margins. BPM is delivering mid-30s gross margin. To grow BPM you start diluting the overall financials of your company.
You are the ones who are starting end-to-end work that IT services pride on?
A lot of IT services companies have proprietary platforms. When they go to a bank, they say scrap yours and take mine. Most clients don't want that. If you as a client have spent hundreds of millions of dollars on a platform, you want to interact with a partner who is technology agnostic, who will help you make it more efficient. We say take these bolt-on tools. For the client it becomes very convenient. We have co-opted the disruptive tools in the delivery models that a lot of IT companies are now finding it difficult to catch up on. BPM is one of the most compelling businesses for at least the next 10 years. It is no more low-end night shift kind of business.
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