All geographies have seen growth from a delivery perspective. Traditionally focused on the administrative side of healthcare business. Would like to go to to the medical side, where HGS can help improve outcome and reduce the cost of medical care.
Chief Financial Officer Srinivas Palakodeti spoke to Moneycontrol about the June-ended quarter and the way forward.
Q: What was the reason for the fall in profit this quarter?
A: That is because of seasonality in our business. Typically, Q4 is our strongest quarter. In most of the years, Q1 has been weak on profitability compared to Q4, and that is primarily because we have healthcare in our portfolio, which is primarily US healthcare related.
They have an open enrollment season which comes in in Q3. We have to start hiring and training people in Q1 and Q2, so the revenues come in Q3 and there is a spillover in Q4.
We also did an acquisition effective April of this year. So from an overall perspective, on the revenue and business side, we are doing well.
In India, we do a lot of work for the telecom companies, and the pressure being faced by clients in a way has come down to us. So we have seen a drop in volumes.
We are re-calibrating on what we need to do in terms of headcount consolidation, giving up some unprofitable lines of business and grow the non-telecom business.
The minimum wages issue in Karnataka has also raised costs for us.
Q: There has been an increase in healthcare from 51 percent in Q4 to 54 percent this quarter. Do you have a wide variety of clients in the sector or is the revenue constituted concentrated in a few accounts?
A: We have been in the healthcare business from inception. We have added clients on both sides. In the US, there are the insurance companies which are called the payers, and the other side are providers.
We do work for both- providers as well as payers.
On the payers' side, we have multiple client renewals. The largest client accounts for 16-17% of our revenue, and is a health client. We have three or four health insurance companies.
We also have a medical durable company which is also growing well. The payer side is bigger for us, and older.
Q: Where do you see the business going forward?
A: On the healthcare side, traditionally we started servicing clients from India, which was non voice, then clients gave us voice business which was primarily done out of Philippines. Then it went to Jamaica which is the near shore destination and also on the offshore.
All geographies have seen growth from a delivery perspective. Traditionally we have been focused on the administrative side of healthcare business.
We would like to go to the medical side, where we can help improve outcome and reduce the cost of medical care.
The other is digital. The mode of interaction is not a call, its email, chat or social media. We have been doing this for a number of media houses in India.
We recently signed up with a very large retailer in US to do social media. We expect to grow this. We are getting good traction for US onshore delivery. We are also opening up a new site, earlier we never did because the price points never looked so good.We have now been able to give better solutions, and we have been winning more business at better price points and margins than we have done in the past. That part is doing well, as well as Canada.