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India's BPO firms to benefit amid IT industry's challenge to grow business: Hinduja

Company says it has doubled its business in India after acquiring the local backoffice arm of Mphasis

IT highest paid sector in India, manufacturing far behind

Apurva Venkat Bengaluru
India's back office sector would benefit from the current challenges faced by the IT industry, including generate higher margin work as they deepen engagement with clients, said a key industry official.

"Are you hearing the thing about margin pressure from the IT companies or the BPM companies? You look at us, FirstSource, WNS and Genpact or any other BPM companies. Look at their margin territory and see if you see what is happening in IT is happening here.This is not happening in BPO," said Partha De Sarkar, the CEO of Hinduja Global Services on Tuesday.

India's people driven Information technology services firms such as TCS, Infosys and Cognizant have cut revenue forecast for the quarter ahead as they see clients cut or slow projects due to business uncertainty. The biggest fallout on IT services firms has been due to banks freezing IT investments or shelving projects after Britain's decision to exit Europe, fearing shrinking market size for business.

 

"The pricing is important but with the right partners you can build right partnership. BPM and IT are completely different DNA, one is orange and apple, the work is and the effects on margins are very different," said Ramkrishan P Hinduja, chairman of HGS.

Only 15 per cent of the back office work globally is outsourced. Nearly half of the estimated $160 billion work is done by captive centres by global firms. Indian firms expect that they could tap this opportunity by focusing on efficiency and cost reduction.

"These companies themselves know the price of doing the business internally and they run a competitive pressure. It is a very matrix driven business. The companies measure how are the BPM (companies) doing as compared to my captive business, they measure the scores of cost. I do not know of a single case where the clients captive center is cheaper than the BPM centers," said Hinduja.

Hinduja Global Solutions, said it has doubled its business in India after acquiring the local backoffice arm of Mphasis, the unit of HP last year.

The company said that the acquisition has helped them build a presence in North India, which they lacked in before because of lack of Hindi services.

"For a BPO service provider, the language we provide services is very important. The acquisition has given us capabilities to service in North India languages. It was a significant missing piece in our network," said Sarkar.

 

 

 

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First Published: Sep 20 2016 | 7:20 PM IST

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