Recruitment led to margin shrinkage: ALLSEC Tech

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Recruitment led to margin shrinkage: ALLSEC Tech

Allsec Technologies has announced its first quarter results. Adi Saravanan, Founder & President, ALLSEC Technologies agrees that adding more than 900 people in Q1 led to the company's margin shrinkage. But, he added that the results of addition of people will be seen in the next quarter.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » RELATED NEWS Allsec Tech Q1 net profit up at Rs 6.78cr ALSO READ See latest News about ALLSEC Tech See previous management interviews See what other Experts & Brokerages are saying about ALLSEC Tech ALLSEC Tech BSE | NSE 25/05/12 Are Mutual Funds betting on ALLSEC Tech?

ALLSEC Technologies has announced its first quarter results. The company's net profit is up at Rs 6.78 crore from Rs 6.31 crore quarter-on-quarter, QoQ. Its net sales are up at Rs 27.6 crore from Rs 25.9 crore QoQ. Its OPM is at 27.6% versus 28.2% QoQ.

Adi Saravanan, Founder & President, ALLSEC Technologies  agrees that adding more than 900 people in Q1 led to the company's margin shrinkage. But, he added that the results of addition of people will be seen in the next quarter. The company has also added two clients in Q1.

Going forward, Saravanan says that the company is now targeting higher growth than the industry growth of 45%.

Excerpts from CNBC - TV18's exclusive interview with Adi Saravanan:

Q: Your operating profit margins have slid a bit from 28% in the previous quarter to about  27.5%.  Is it primarily because of staff cost?

A:  In this quarter, we have added more than 900 people and the results of adding these people will show in this quarter.

Q: Are you saying that you will be able to maintain your margins around 28% or may be even hike them up to 29%?

A: The obvious strategy that we have adopted is that we are matching people with the requirements of the business because in the previous year, we were not able to ramp up to the desire of the clients. 

But this time, we have more number of people, so as business comes in, we just want to ensure that it is delivered properly.

Q: Do you have any new client addition?

A: We added two clients in the last quarter. We have also added people on the HR - BPO that we are doing.  Our overall ratio of voice has gone up to 81% and the non-voice ratio is around 19% versus 85:15 in the last quarter.

Q: How much do your top 10 clients add in terms of revenues?

A: The top 10 clients would have provided about 70 % of our revenue.

Q: What is your revenue mix from onsite and offshore?

A: We don't have onsite operations. Everything is based out of Chennai. As all know, we are a call center BPO company and not an IT services company.

Q: Going forward, what is the outlook now for the company and what is the area of focus?  What are the growth targets you are keeping for your company?

A: We definitely want to grow, slightly more than the industry rate, which should be more than 40 - 45%. We are in line with whatever we have committed to the investors.