Growing unemployment in the US and Europe and the increasing political pressure on Indian firms to employ locals has turned in favour of the business process outsourcing (BPO) firms. To start with, the country?s second largest BPO firm WNS Holding?s newly appointed chief executive officer Keshav Murugesh feels local hiring in the US and Europe would help BPO players save costs, as qualified people there are ready to take up stretch roles at throw away costs. This is as low as $10 per hour, which is quite similar to the Indian offshoring rates.
Murugesh, who will join WNS this weekend, views it as a large opportunity to get increased onshore work, that eventually translates into better margins. ?Besides low-cost manpower that can be trained easily, the real estate in the backward locations like Kansas city and Nebraska in the US, is available at cheap rates now. So the overall cost of delivering from these centers is as low as delivery from India,? he added. However, as the economy revives and employment rates go up, the firms could experience increased attrition. ?Offshoring is the biggest saving model, so we cannot build huge centres in these locations. However, there are clients that demand real time delivery from local centres, which can be done with 200-1000 seat delivery centres in two to five locations,? said Murugesh.
The Indian BPO industry has been facing a tough time in the US as anti-outsourcing has become a key agenda with the government. However, the larger view is that US president Barack Obama?s tax proposals, targeted at saving American jobs by reducing tax benefits for firms that outsource to India, is likely to have little impact on the Indian outsourcing services industry. Industry players have already increased local hiring in the US.
Top Indian BPO players like Genpact, EXL and TCS BPO have been working backwards to reduce cost levels in a bid to maintain margins, during the last financial year. However, this is not expected to be sustainable in the coming financial year.