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May 23, 2003

Why Warburg Pincus finds the BPO business attractive



Some interesting extracts from an Knowledge@Wharton interview with Wolfe Strouse managing director at global private equity firm Warburg Pincus which has invested in Indian BPO company WNS

"In July 2002, WNS acquired a company in Britain called Town and Country, which provides claims processing services to the auto sector -- largely to self-insured fleets -- using an advanced technology platform. The company processes claims, but also it provides a preferred network of repair shops. We have moved some of the claims processing as well as the maintenance of the network to WNS operations in India. We have seen tremendous efficiencies from both the technology enablement and also from the highly skilled labor in India. Similarly, there may be processes that are not yet technology-enabled. One can technology-enable them and layer them with cheaper, better resources to get a doubly positive effect.....

Outside the technical support help desk area, I don’t think voice is the logical thing to move. For technical support or areas that have a large technical community it makes sense, but some of the customer service stuff doesn’t make a lot of sense. I think there are easier processes to focus on.

In the future, data intensive tasks such as mortgage processing and claims processing will move offshore. Claims processing in the healthcare side may not move immediately because it is complex and people haven’t figured it out well here. Other insurance back office functions such as subrogation or recovery will also move out over time. We have one customer at WNS for whom we are running their entire SAP financial systems out of India: accounts payable, treasury functions, etc. It’s like their whole finance department is in India. I think you will see more such arrangements, where control and strategic level remains with the customer but the processing piece moves offshore.

Click Here to read the full interview.