How Europe and US will affect Indian BPOs

BANGALORE, INDIA: Though the sovereign debt crisis in Europe seems to have been taken lightly by many of Indian BPOs as evident from the announced shopping plans of Wipro BPO and others in Europe, experts are of the view that new business strategies are necessary to circumvent the European impact.

Speaking on a panel at NASSCOM BPO Strategy Summit 2010, Kiran Karnik, former president of NASSCOM, said European crisis had to be looked at seriously as it could affect Indian economy as well.

However, the warnings are not that frightening for the industry. “Uncertainties are there. It is now difficult to get lots of positive feedback from some European markets like the UK. But the companies having presence in these markets need not worry much as the service buyers there always buy quality service,” said Ian Marriott, vice president, Research, Gartner.

Marriott added that such companies needed to tweak their business strategy in order to hedge negative impacts of the European crisis. Despite the crisis, Germany, Nordic markets and France hold good opportunities for BPOs, he added.

Meanwhile companies like Wipro BPO are putting on a bullish look and planning acquisitions in Europe, leaving aside any fear of the crisis.

However, all NASSCOM heads were unanimous in saying that the proposed ‘American Jobs and Closing Tax Loopholes Act’ in the US will not affect Indian BPO industry.

According to the bill, the US will impose of tax of 2.5 cent on each call offshored. “This is not a concern for us because we have grown from the stage where 'calls' constituted a major share of our BPO business. Now the Indian BPO industry is focusing more on value enhanced end-to-end solutions. But taxing calls may affect new emerging economies like Philippines,” said Som Mittal, president, NASSCOM.

The real issue here is not business volumes but the sentiments of protectionism, he added.

The House of Representatives has approved the act on a 215-204 vote, clearing the way for the US Senate to hold final discussions in June.