Source:economictimes.indiatimes.com

US-Based Bessemer Venture Partners, which recently closed its seventh global fund at about $1 billion, has earmarked $350 million for Indian investments, especially in companies that cash in on the rise of consumer spending, infrastructure development and intellectual property-based opportunities, a senior official said.

The investment house is also in advanced talks with one company each in construction, power and renewable energy sectors, as part of a plan to increase its portfolio by as many as 25 investments through the India-specific fund from the current 17, BVP India managing director Devesh Garg said. The proposed investment in the construction firm could be in the order of $25 million while that in the other firms could be up to $15 million each, he added.

“The consumer class in the country is definitely on the move up. Hence, we are more interested in investing in branded products and services,” Garg told ET in an interview. “Secondly, the country’s government looks dead serious about infrastructure development. Hence, there is scope for companies involved in construction, roads, power generation, which is why this sector also attracts us in India. Finally, we would like to invest in companies involved in exports of skill-based products, taking advantage of India’s excellent base of intellectual capital.”

While venture capital and private equity funds investing in India have focused on information technology, telecom and outsourcing companies in the country, Bessemer wants to turn its attention to other sectors that are likely to see explosive growth in the coming years, he said.

BVP’s investments include Shriram EPC, a Chennai-based engineering company that builds power plants, windmill towers and such facilities; Lloyd Electrics which makes coils and Motilal Oswal, a financial services company. BVP’s investments in the country were between $3-25 million in size over the last three years, and Mr Garg expects to maintain that strategy.

Venture capital firms invested about $130 million across 20 deals in India during the first quarter of 2007, according to a study by Venture Intelligence. As many as 14 of these deals, worth a total of $73 million, were in IT and IT-enabled services industries. Also 45% of deals in that quarter were in growth stage companies, and the rest in early stage ones.

Source:timesofindia.indiatimes.com

After BPO and KPO, now it’s PO or Procurement Outsourcing that’s catching up in India. It began way back in 1995, with the Thames WaterAccenture contract but lost steam somewhere along the way. But now, PO is emerging as another arm in India’s successful outsourcing story.

IDC estimates the worldwide PO market reached $627 million in 2005, and is expected to expand at 22.3% (cumulative growth rate) to become $1.7 billion by 2010.

With such high growth rates, Indian players are gearing up to take a larger share in the pie. Although still at a nascent stage, experts predict PO is slated to emerge as India’s next big outsourcing story. “India’s potential to emerge as the favorite destination is not because of labour arbitrage alone. It’s due to its highly skilled English speaking labour pool, engineering skills, value enhancement through low-cost country sourcing, competitive advantage, process and quality focus,” says Rakesh Mittal, COO and president of Corbus a prominent global PO player.

PO spans a spectrum of procurement related processes like requisitioning of goods, vendor management, invoice processing, order managers, procurement planners, catalogue development roles, supplier development as well as supply coordination in low cost countries.

It started off when Fortune 500 companies started having a more mature buying process. As a result, large vendor management groups were set up and complex bidding processes were introduced. In this rush to outsource, one group continued to enlarge, which is the procurement group.

According to Saurabh Gupta, research director, Everest Research Institute, most India-based suppliers including Infosys BPO, Genpact, HCL are looking at the PO market very seriously now. They are making investments both in terms of people and technology to grow in this space. As a location, India has been established itself as a global offshoring hub and big PO suppliers are beginning to utilise their India-based centres to absorb a bulk of the transactional procurement work.

“Given the strong BPO support infrastructure that India has, it’s also an emerging destination for tactical sourcing and spend analytics.” explains Gupta.

As for the future of PO in India, experts say it’s tightly coupled with the trends around offshoring in PO, which is on an upswing worldwide. “Offshoring in PO enables buyers to better manage their operational costs. So we expect offshoring of procure-to-pay (P2P) services like day-to-day purchasing, accounts payable, etc, bundled with spend analytics to be the main growth areas. PO will also gain significant momentum as an extension of the financial and accounting offshoring,” Gupta says.

Managing and hosting of procurement solutions is also a big opportunity for India. However, getting category experts and sourcing managers in India is a major challenge. That’s because Indian universities do not have procurement-focused curriculum. Mittal cautions, just any company in offshoring space cannot execute PO successfully, after all it requires several years of experience.