IT giants face a new threat as BPOs swoop in to pick top executives

Nine of the 13 executives—ranked senior vice-president and above—joined RP-Sanjiv Goenka-owned Firstsource. Two executives were hired by Nasdaq-listed ExlService Holdings Inc, and one each joined Genpact and WNS (Holdings) Ltd, according to research by Mint based on press releases and LinkedIn searches.

The executives previously worked with Accenture Plc, Tata Consultancy Services Ltd, Infosys Ltd, Tech Mahindra Ltd, Mphasis Ltd, Cognizant Technology Solutions Corp, Persistent Systems Ltd, and DXC Technology Co.

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Analysts attributed the shift of senior talent to factors such as more lucrative and bigger roles for the executives at the outsourcing firms, a slowdown in IT services, and BPOs looking to scale up their operations. BPOs offer customer support to clients.

Role of AI

Recruiters were divided over whether the rise of generative artificial intelligence (GenAI) played a role in these job transitions.

“The BPO world is becoming tech-oriented and driven by AI. In the future, the BPO work will be tech-driven and those companies will need people who can understand that technology," said Navnit Singh, chairman and regional MD of executive search firm Korn Ferry.

However, the managing director of an executive search firm downplayed the contribution of GenAI in this talent churn as of now, saying there was scope for it in the future.

One analyst said the slowdown in IT services companies led to the talent shift from 2022.

“The general slowdown in IT services firms and the senior tenure of many executives presents an opportunity for movement across the overall industry," said Ray Wang, CEO and principal analyst at Constellation Research.

Also Read: Demand slowdown to weigh on IT services firms’ Q1 show

Revenue for India's top two IT services companies, TCS and Infosys, grew 4.1% and 1.9% to end FY24 with $29.1 billion and $18.6 billion, respectively. TCS trimmed its headcount by 13,249 and Infosys by 25,994.

Revenue growth varied for BPO companies. EXL and WNS grew in double digits, reporting revenue of $1.6 billion and $1.3 billion at the end of financial years ended December 2023 and March 2024, respectively. However, annual revenue at Genpact and Firstsource grew 2% each.

The BPO units of Infosys and Tech Mahindra also grew at a slower clip. Revenue at Infosys’s BPO business unit, Infosys BPM, grew 2% to $953 million as of March 2023, which was the slowest paced in seven years.

Tech Mahindra’s BPO revenue rose in single digits to ₹7,712 crore ($925 million) in FY24 after two years of double-digit growth. Only Infosys and Tech Mahindra disclose their revenue from their BPO businesses.

Better opportunities

A Mumbai-based analyst attributed the movement of top talent from IT companies to BPO firms to better career opportunities at the outsourcing firms.

“The shift to a pure-play BPO company might just be a function of getting a bigger role in a company. While BPO is just a business unit in an IT services company, the people who joined BPO firms consider this an elevation where they are now a CXO rather than a business head of a unit at an IT services company," the analyst said on condition of anonymity.

Also read: Attrition costs are catching up with IT companies

Another analyst attributed the move to BPO companies to more lucrative option for the executives.

“BPO firms have reached a scale that they are attracting more investment and have large aspirations. This in turn has led them to invest in bringing in new talent at the leadership level and the natural place to find this talent is the already scaled IT service firms," said Peter Bendor-Samuel, founder and chief executive officer of consulting and advisory firm Everest Group.

Following Idnani

Four executives who joined Firstsource—Sohit Brahmavar, Hasit Trivedi, Anshul Bhargava, and Ritesh Idnani—previously worked with Tech Mahindra. Two of them followed Idnani, who joined Firstsource as CEO and managing director in September 2023.

Idnani was a president at Tech Mahindra, heading its BPO, software products and platforms, and experience design businesses globally until September 2021. He worked as chief revenue officer of Uniphore, a Palo Alto, California-based multimodal AI and automation platform, until August 2023.

“Idnani worked in Tech Mahindra before joining Firstsource and has gotten his trusted people from there," said the Mumbai-based analyst.