The Indian BPO industry is staring at an inflation of about 15% in wage bill this year. This will put an additional pressure on margins already reeling under currency volatility. The apprehension is that at least a few BPO firms might opt for recruiting more employees overseas and less in India on account of the increased expenditure.
The wage inflation was in single digits last year because most of the new recruits did not expect heafty pay packages because of the recession. But this year, with the turnaround in the economy, costs for quality hires have started surging. The demand-supply mismatch and higher expenses are already making some companies, hire more people in overseas than in India.
Raman Roy, chairman & managing director, Quatrro BPO Solutions, widely regarded as the father of the Indian BPO industry, said if the demand of the industry is for 100,000-150,000 people, supply is less than 30-40% of that. ?The BPO industry can grow at 30-40% if we are able to solve the demand supply mismatch.?
According to estimates by KPMG, wage hikes of 10-15% in a firm usually result in an impact of about 200 basis points on margins. Research firm Gartner estimates that in tier I cities, wage inflation will be around 12-13% this year, whereas it will be slightly lesser at 8-10% in tier II and III towns.
Aparup Sengupta, global CEO of Aegis, said wage bills this year would be pushed up because of the higher GDP growth.