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March 02, 2008

"US slowdown to benefit Indian BPOs"

Businessworld had organized a roundtable discussion on the impact of the US slowdown on the Indian BPO industry. The panel members included Rahul Singh, MD and CEO of Citigroup Global Services; Raman Roy, chairman and MD of Quatrro BPO Solutions; Pavan Vaish, CEO of IBM Daksh Business Process; Salil Parekh, executive chairman of CapGemini India; and Neeraj Bhargava, CEO of WNS Holdings.

Here is an excerpt from Neeraj Bhargava's remarks:
First of all, I want to conclusively contrast the IT and BPO industry here because I have spent bulk of my time trying to answer questions which are more related to the IT industry than the BPO industry. We have annuity businesses. If people have budget cuts they actually seek us out even more and there is hardly any discretionary spending work we do. We are not dependant on CIO budgets for new spending so therefore in this… as it happened in the last downturn, when all IT companies who after years of denial that BPO is important to them, started looking at BPO for growth. I think we are entering that cycle again that BPO is becoming a more attractive opportunity for everyone whether it is investors or people who are running companies. I agree with Peter wholeheartedly. I think there is a very specific reason that the last quarter, October-December, people spent their time relating to the new environment and the new situation.

In January, everyone has got a new budget and when they look at what their boss has given them is slashed by 20 or 15 per cent and say, “Oh my God! How am I going to do it?” So, at this point of time, our sense was that in the October-December period there was some sort of slowdown in decision-making which is probably what I hear Peter saying as well, but since the beginning of this year, actually the intensity has gone up so much that we are having a hard time putting up with meetings, leave alone handling the stuff that is coming. So, I personally think that this is actually very positive for us and the evidence is already showing.

And from the inimitable Raman Roy:
Actually, listed companies will be under pressure from their investors to take costs off from their balance sheets. According to a study we did, in the US service industry the recall for outsourcing and offshoring was 85 per cent plus. I don’t know, Peter, if you agree with that, and therefore the moment there is any hint of a slowdown and the investors put pressure — hey, hold on guys, we need to take out cost and maintain profits. I really don’t care why people offshore. I don’t burst into tears when somebody comes to me saying, “I have given it to you because I need to take out cost”, or he comes to me and says, “I am giving it to you because I am growing too fast and I can’t manage it.” The fact is, it is coming to us, and again, Peter, you made the point on mortgages. Again, we work in that industry… yeah, so the origination of subprime etc. has gone down, agreed. But what about foreclosures? I cannot manage the volumes I have been getting on foreclosures.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.