It has been awhile since we addressed publicly traded companies in India, but we are fortunate enough to be joined once again by senior analyst
Abdul Saleh for his viewpoint on equities he covers in India.
Part of your Indian coverage deals with business process outsourcing, or BPOs. Can you start by defining this term for us?
Sure. BPO, as you correctly pointed out, is known as business process outsourcing. BPOs technically started with the IT services sector as a whole. With the Internet boom, there was demand for more and more demand for back-office operations, particularly in the IT sector, and that's where the BPOs came in.
Historically speaking, as you've probably noticed, back-office operations and outsourcing of back-office services is not a very uncommon thing. We see greater companies and smaller operations have their payroll processing outsourced. That's why we have companies like ADP (ADP) and Paychex (PAYX) flourish for a great number of years.
The BPOs that we have under my coverage right now are specifically four companies. They are Wipro (WIT), Infosys (INFY), the third is Satyam (SAY) and the fourth is Patni (PTI). Properly speaking, these companies should not just be termed as BPOs, because the business process outsourcing part of the revenue structure is a significant portion, but it's not the whole thing. It's also consulting, it's also turnkey projects that they all engage in with various companies in the United States. Technically speaking, we should call them information technology enable services; that should probably put it more in perspective.
In fact, these are four of the top technology firms in all of India.
That is correct. I was looking at a list of companies that trade in India on the Indian stock exchanges, and these are probably four of the largest. The other one that is not included in my coverage area and does not trade in the United States is a company called TCS, the Tata Group. They are a significantly large company, and they have a major share in the market of the business process outsourcing business overall.
Out of the 12 [publicly traded businesses in this group], four trade as ADRs [American Depositary Receipts], and we have coverage on all four of these. And they are competing domestically in the U.S.
