Is recession good or bad for the business process outsourcing sector? Probably both! Recession in US seems to be a mixed bag for Indian BPO vendors.
They do agree there has been a temporary slump in offshoring due to the US credit crunch, but expect the same recession-related factors to fuel increased demand for outsourcing by the end of the calendar year.
Both IT and BPO companies are witnessing a spate of project delays and cancellations, especially in the financial services space, due to recession in the world's largest economy. It must be noted that clients can save up to $5 million in costs annually if they enter into a major outsourcing contract. So why are the US companies going slow on their BPO engagements even when they want to cut costs in a recession?
Says Mr Raju Venkatraman, Joint Managing Director and Chief Operating Officer of Mumbai-based Firstsource Solutions , "When a company is hit by a crisis that is at least 100 times bigger than the cost benefits that outsourcing will bring, would it think about saving $5 million a year or find solutions for the bigger problem?" Outsourcing is important, but not a priority in a crisis-like situation, he adds.
They do agree there has been a temporary slump in offshoring due to the US credit crunch, but expect the same recession-related factors to fuel increased demand for outsourcing by the end of the calendar year.
