Hit by appreciating rupee, rising costs, wage inflation and the possibility of tax breaks vanishing after March 2009, Indian BPO workers may have to settle for lower pay hikes in the next financial year. Industry experts said that the wage increase would be moderate as the BPO firms were under tremendous pressure to maintain profitability.
?I think it (wage moderation) is bound to happen. At the end of the day, you cannot go on escalating wages. There has been a lot of escalation in the last few years. Definitely, the affordability factor is going to weigh in now, if they continue to give wage increases,? Nasscom president Kiran Karnik said here on Monday.
He said though the wage increase would not go away completely, it will be moderate. ?I see moderating in the sense of a lower increase and not no increase,? he said.The rupee has appreciated over 9% from the beginning of this year and the BPO firms, which usually operate on thin margins, have been feeling the pinch.
WNS Global Services chief executive Neeraj Bhargava also said the wage increase would slow down. ?I think enough has happened in the market. Particularly, given the fact that there are other pressures, I think it (wage increase) will go slow,? he said refusing to give any projection.
In the current financial year, WNS Global Services that has close to 15,000 employees had given 7-10% annual wage hike.
However, Karnik said that despite all these pressures, the IT enabled services industry was in line to meet its target of $10 billion in exports in the current financial year ending March 2008.