Study Predicts Lower Profit Margin For BPO

New Delhi, Aug 3: | Updated: Aug 4 2003, 05:30am hrs
The profit margins for business process outsourcing (BPO) firms are expected to come down and stabilise at around 20-25 per cent over the years, according to a joint study carried out by the Associated Chambers of Commerce and Industry of India and the International Data Corporation (IDC).

The factors that are affecting the pricing and adding to the volatility include proliferation of smaller players in the burgeoning business process outsourcing industry that has put the bigger and established players in a spot.

This has led to the commoditisation of BPO services, especially in the low-end of the value chain, the exchange rate fluctuations.

Based-on rough industry estimates, for one per cent appreciation in the rupee value against the dollar, there is an impact of over one per cent impact on the bottom lines of companies and also the global economic slowdown has resulted in global corporates delaying their outsourcing decisions.