Rising Rupee - Headache for BPO cos
IT and BPO October 23rd, 2007
As the BRIC countries develop faster their currency appreciates. Though it is good as a whole for the nation, it immediately impacts BPOs and IT cos who thrive on wage arbitrage between developed economy and them.
US-based Spectrum Global Fund Administration, providing back-office operations to hedge funds in the US and the UK, is closing its facilities in India. The company had started its operations in India two years ago.
The company, which is based in Bangalore, has close to 100 employees. The centre serves about 60-70 clients of the total 110 in the hedge fund sector. The company plans to close the centre by December-end.
“The decision has been taken by the US office. We have not been told about the procedures. Negotiations as to what happens to the people working here is yet to be conveyed by the head office,” said a source close to the development.
The company has cited reasons such as increasing attrition and rising costs for closing its Indian operations.
Economies 2.0
We estimate that the rupee strengthening has eroded margins by 2% to 3% for many ITO and BPO firms that have greater than 30% of their revenue offshore (doing work for dollar denominated countries).
Companies that have invested in Europe and APAC will weather the rupee slide better.
Interesting website…What would make this even more interesting is when you start covering topics like
1) Oppurtunities in these markets for business
2) Hot sectors in these countries
3) IPO’s , Mergers and Acquisitions by each country happeing every week
4) Culture, Arts and Social scene and best places to live in these countries
5) Sports and games in these countries
The best kept secret of all these countries is that people know very little about them…There is no one place i can go and read about all the above. Look forward to more posts..Hot and Happening news on BRIC.
Good Luck Blogging
Yes, BPO companies will have the problem in the short term. But they really need to work on it to provide value in long term. Great Blog ! Keep it up
This is probably heading towards some correction in outsourcing. There must be more organizations who will calculate the outsourcing cost and weigh the cost with quality that they can achieve in US. Dell moved its support back to US.
Also lately I have noticed a preference of Indian consultants working offsite in US as compared to offshore in India. And primary reason being higher cost apart from other benefits of being closer to main site. If the cost of the resource onsite is $90, then cost of same resource being offsite in US is $50 whereas the cost of same resource in India has moved from $25 to $35. I see a new trend of offsite(in US) resourcing and ultimately impacting BPOs in India.
But I guess this is just some correction which may continue until rupee is stable. Indian BPOs have improved the quality many folds over last couple of years. Probably they need to work still harder to fight rising rupee now.
Interesting site!!
Hari,
Thanks for your comments. We will try to blog on all those points you have mentioned. cheers
Sambasivan
Cool site!!!
You can also list the contents in bullets so that they will be quickly absorbable.
Looking forward to more interesting updates on BRIC
veena