MOVE over BPO here comes PPO

The new trend to watch out for is person to person offshoring (PPO), global research and analytics firm Evalueserve said. According to Evalueserve, PPO consists of services that can be offshored to individual professionals by entrepreneurs seeking to bootstrap their business and can be utilised by anyone with the technology advances and growth of internet in today's world. All a professional requires to render these services is a PC and a reliable internet connection. Though, each PPO contract is often of low value usually between $100 and $5,00 (Rs. 4,000 to Rs. 20,000), yet, due to the large number of end consumers involved, the total addressable market in the US alone has exceeded $20 billion. The services being outsourced spans across online tutoring, website development, graphic design, database and software development, writing, editing and translation, accounting and tax preparation services, home and landscape design, marketing and sales support and creating legal drafts. According to Evalueserve, the sector generated annual revenues of over $250 million in fiscal year ended March 31, which will grow to over $2 billion by 2015, representing a cumulative annual growth of 26 percent. The payments, which could be based on a per hour or a fixed final cost basis, are generally made through wire transfers, cheques or credit cards. The industry is currently operating through two business models - first being direct model where a client signs a contract directly with the vendor from a low-cost location. Under the more prevalent Online Marketplace model, the PPO vendors and clients enroll at an online marketplace - which could be free or may involve a subscription fee or percentage of contract value or revenue after winning a project. After evaluating bids from various vendors, the client awards the work to selected vendor or freelancer. In this model, the online marketplace typically earns 5-15 per cent of the contract price in return for an assurance of a minimum service level from the vendor. The fastest growing segment is editorial and writing services, which include writing for books, copy writing, editing, proof-reading, news articles, newsletters, press releases, translation and web content. These tasks do not require expensive infrastructure and people can work from homes.

KPO firm eClerex to tap market for Rs 101cr

MUMBAI: KPO firm eClerex Services is planning to raise Rs 101 crore from the capital market. The firm has filed its draft red herring prospectus with Sebi for an initial public offering (IPO) consisting of a fresh issue of shares and an offer for sale from the promoters and one of its investors Burwood Ventures. The IPO will be through the book-building route. Set up in 2000, eCelerex provides data analytics and data process management services to the retail, manufacturing and financial services industries. Recently, it acquired Ingentica Travel Solutions and its subsidiaries, marking an entry into the travel and hospitality sector. The company proposes to use around Rs 22 crore of IPO proceeds to make more acquisitions. The rest will be used to set up infrastructure and additional facilities. The company has already taken up a facility at Hinjewadi in Pune for its expansion beyond Mumbai. It’s existing facilities are located in Mumbai. The company employs over 1,000 professionals. For the year ended March 2007, the company posted a net profit of Rs 40.5 crore on revenues of Rs 86 crore, giving a profit margin of close to 50%. The company’s net profit for the quarter ended June 2007 was Rs 10.2 crore on revenues of Rs 26 crore, giving it a profit margin of around 40%. The high margins have been attributed to the complex work it does for clients and its domain expertise, according to one of the directors and co-founders of the company P D Mundhra. The downside to the company’s high profitability is that a large percentage of its revenues, around 85%, come from five customers. Under the existing shareholding structure of the company, the promoters own about 73% and Lehman Brothers and Dell Computers own about 3% each. The rest is held by Burwood Ventures, an investment firm based in Virgin Islands. JM Financial and Edelweiss Capital are the book-running lead managers to the issue