Sometime in early 2007, Phaneesh Murthy, the CEO of iGate Corp, a US technology outsourcing firm with most of its operations in India, faced a situation that few of his peers would have faced. In a matter of three months, one of his businesses that accounted for more than a tenth of the company revenues crashed to zero.
In what is probably one of the earliest signs of the global financial crisis on Indian soil, the company lost all the revenue it got from its mortgage origination business (the business of scrutinising applications and documents for banks issuing loans), which is based in Bangalore.
iGate’s mortgage process outsourcing (MPO) business wasn’t alone in suffering such a dramatic impact. After all, mortgages were at the centre of the financial crisis. Customers in the US were shutting shop or selling out. Even by early 2007, over 20 US companies dealing in subprime mortgages had to close down. As the problem spread, subprime lending, which accounted for a fifth (or USD 605 billion) of all new mortgages in 2006, virtually came to a stand still. Since then, over 350 lenders in the US have filed for bankruptcy, halted operations or sold out to bigger firms.
Prashant Kothari, president and founder of String Real Estate Information Services, says, in early 2008 his pessimism was nine on a scale of one to 10. As the year progressed, banks collapsed, and credit froze, his pessimism about the industry had touched 20 — on a scale of 10. “It had broken the scale,” he says.
Now, here’s the surprise. Just two years on, far from collapsing, some of the MPOs seem to be doing a good business again. Today, iGate’s BPO growth is predominantly driven by the mortgages business. For Kothari, the business grew at about 50% in 2010. He reckons many of his competitors grew at least by 20% to 30% during that time. ISGN’s revenues more than doubled last year. (ISGN is a mortgage technology and services company funded by the KK Birla group and New Enterprise Associates.) So what has changed?
Source:-http://www.moneycontrol.com/news/features/indian-outsourcing-hashouse-call_515027.html
