The $3 billion knowledge process outsourcing (KPO) industry in India has taken a big hit as the ongoing financial turmoil continues to slacken consumer demand and dwindle cash flows in the industry.
The KPO industry in India is witnessing lower business volumes, with most of the KPOs in India reducing their growth targets for the next year (2009) as acquisition of new clients gets tougher. Currently, India performs the widest range of KPO activity, especially in the areas of finance and accounting. The financial services industry is responsible for more than 60% of the KPO performed in India.
?The amount of business that?s coming to India is taking a hit as a few banks have gone bankrupt and most have cut jobs drastically due to the global financial turmoil. We have reduced our growth targets to 25% next year from 40% expected earlier,? said Lokendra Tomar, senior VP – knowledge services, business administration and professional document business at Integreon, a KPO.
Moreover, companies are also resorting to lay-offs as a measure to cut costs. KPOs, including Integreon and Adventity, among others, have cut down jobs. However, they declined to reveal any specific numbers. ?For the next one month, we are not hiring in India, but for the next quarter, we will be hiring people. The KPO industry is taking a hit, but it?s temporary,? Tomar added.
Meanwhile, Morgan Stanley had also announced that it plans to reduce headcount by 10% in its institutional securities business and 9% in asset management as it copes with a deteriorating economy, disrupted capital markets and falling asset values.
Says Kumar Subramanian, CEO, Adventity BPO India Pvt Ltd, ?The client acquisition rate from the US has slowed down and customers are taking a longer time to decide.? Adventity had last year given offer letters to students during campus recruitment but have withdrawn the offers.
