The business process outsourcing arm of Infosys [Get Quote] Technologies, Infosys BPO, has taken steps to reduce variable costs and accelerate staff redeployment by terminating the services of over 600 contract workers in February, according to sources close to the development. The workers, who were on multi-year contracts, included temporary workers, whose exact numbers are not clear.

Simultaneously, Infosys BPO is adding another 2,000 workers by the end of March, which will raise its headcount above the 20,000 mark from around 18,000 at present.

A company spokesperson, however, maintained that employees on the direct rolls of Infosys BPO had not been laid off. "As a matter of principle, Infosys does not believe in layoffs. In fact, we are further expanding our headcount in line with growth imperatives amid the global recession," the spokesperson said, claiming to be unaware of any BPO arm's contractor carrying out layoffs.

HR industry sources, however, confirmed the development. Contractors catering to Infosys' staffing needs include Adecco PeopleOne, Mafoi and TeamLease.

The spokesperson said Infosys BPO would be honouring all offers it had made through fiscal 2009. For the quarter ended December 31, Infosys BPO had revenues of Rs 346 crore and net income of Rs 56 crore, with about 17,000 people on its rolls.

Infosys BPO is said to be competing for large contracts in the $100 million bracket in Europe, Japan and Australia, and plans to hire fewer people in 2009, according to HR industry sources. The head of a leading HR recruitment firm told Business Standard that Indian BPOs had been hiring contract workers in large numbers since October last year to handle the occasional lucrative assignment from US and European clients.

"Often, these employees are not retained beyond the lifecycle of the project. Most of them see their contracts terminated once the project is completed. More stable clients, on the other hand, are entrusted only to permanent employees, as continuity and project experience are key factors for these clients," he said.

Key focus areas for the BPO arm have been churn analytics in the telecom space, revenue enhancement and assurance solutions, and network financial management. The last mentioned includes offerings like Circuit Inventory Management and Network Access Cost Management.

Infosys Managing Director S Gopalakrishnan has made it clear that the company is looking at acquisition opportunities in traditional BPOs in banking and financial services, telecom and manufacturing verticals.

Infosys Technologies, Wipro [Get Quote] Technologies and HCL Technologies [Get Quote] also see strong demand emerging in the remote infrastructure maintenance space, where IT budgets continue to hold strong despite a weakening demand environment. The scope for integrated consulting-BPO service deals in the remote infrastructure space is immense and, hence, all three companies are looking at acquisitions in the $100-200 mn range in this space, say industry sources.

HCL is known to be eyeing an Australian BPO company for in the $200 mn range, while Wipro acquired Citigroup's remote infrastructure management services subsidiary in December last year.