Spectramind raises $14 mn from Wipro and Chrysalis

Delhi-based remote processing services company Spectramind announced it has raised $14 million in the second round from Wipro and Chrysalis Capital

agencyfaqs! News Bureau

NEW DELHI

Spectramind eServices Ltd, a Delhi-based remote processing services company, announced on Thursday that it had secured $14 million in the second round from software major Wipro and venture capitalist Chrysalis Capital. Spectramind had raised Rs 360 million ($7.5 million) in the first round early last year from Chrysalis and HDFC.

Eighteen-month-old Spectramind will get $10 million (Rs 480 million) from Wipro as part of a broader strategic alliance under which it will offer remote processing solutions to Wipro's clients, thus completing the latter's offerings portfolio, including outsourced helpdesks.

After the second round of funding, Chrysalis' stake will come down to 41.3 per cent from the earlier 54 per cent, Wipro will hold 20 per cent while HDFC's stake will be diluted to 6 per cent from the earlier 10 per cent-plus. Spectramind promoter and CEO Raman Roy and his team hold rest of the equity.

Wipro's decision to invest into Spectramind is part of its larger plan to enter the IT-enabled services space. Company officials said it makes better business sense for Wipro to make one or two strategic investments in leading companies in the arena like Spectramind, rather than make a foray in the IT-enabled space by itself. The reasons are obvious.

India is fast becoming a hub of call centre and back office operations with players like Daksh and GE making significant investments in market development. If one goes by the National Association of Software and Service Companies (NASSCOM) projections, the Call Center business is one of the fastest growing sectors within the IT software and services industry. In the year 2000-01, the call centre and back office services industry contributed Rs 2,100 crore in terms of revenue and employed more than 34,000 people. A NASSCOM-McKinsey Report has estimated the IT-enabled services will grow to a Rs 8,160-crore ($17-billion) industry and employ more than one million people by 2008.

NASSCOM projects that the growth of IT-enabled services for the year 2001-2002 will primarily be driven by the increase in business process outsourcing and back office operations. This, together with customer interaction services, will account for over 50 per cent of the revenue generated by the IT-enabled services sector in the coming year, touching Rs 6,300 crore.

"The IT-enabled sector is complementary to our business and offers immense growth opportunities. Many of the challenges they face as an infant industry are those that we have overcome. This investment allows us to participate in this business opportunity without diluting our per capita operating margin. In addition, it can open new business opportunities for Wipro. We have carefully evaluated the remote outsourcing space over the past six months and have zeroed in on Spectramind due to its experienced management team and the shared values and processes," said Wipro chairman Azim Premji.

Spectramind has 980 workstations at its existing facility in Delhi, which are manned by close to 2,300 employees. A second facility is underway at Mumbai where Spectramind will set up 1,000 workstations and hire another 2,500 employees. Roy claimed he had already contracted business worth 2.5 times his existing workforce.

Roy helped set up the large call centre businesses of GE Capital and American Express in India before turning an entrepreneur himself. Spectramind has Dell and British Telecom among its clients. Most of its clients are in the information technology, telecom, financial services and insurance sectors.

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