While deferring its plan to set up a business process outsourcing facility in Visakhapatnam, VisualSoft Technologies, a software major, on Wednesday decided to set up a 500-seat unit in Hyderabad.

Announcing this at a press meet after the company's 8th annual general meeting, D V S Raju, chairman and managing director of VisualSoft, said the company's proposed BPO unit at Visakhapatnam will take about two years for completion due to lack of trained people there.

The Hyderabad facility, which is expected to be operational by March 2004, will initially take up help-desk services, in-bound call centre services, claims processing, multi-media services and tech support.

For the Visakhapatnam facility, the company had earlier acquired 100 acre of land in the port city. It expects to incur a capital expenditure of Rs 40 crore (Rs 400 million) on the 2,000 seat unit and on the initial project works over the next twelve months.

Raju said, "We are in the final stage of negotiations with three customers for providing BPO services and expect to close the deals shortly."

The company expects revenue flows from the BPO operations from next fiscal. It has not yet decided on whether to float a separate subsidiary for the BPO operations.

The company, which currently has 700 on the payrolls for BPO operations, expects to recruit about 400 people in the next six to nine months.

The existing 120,000 sqft facility can accommodate only 200 more people. So, the company is planning to take two separate leased facilities with a total area of over 80,000 sqft for the proposed expansion.

Raju said the company will enter its next growth phase in the next four to six quarters. He, however, did not announce any revised guidance for the current year.

"We will achieve the 20 per cent growth guidance issued for the current fiscal and anything above that will be a bonus for our stakeholders."

The company has bagged a major R&D outsourcing contract in the current quarter from a Fortune 50 technology firm.

VisualSoft will develop a technology platform for the United States firm and own the intellectual property. Declining to reveal the size of the order, Raju said it is a long-term strategic relationship with the client.