For business process outsourcing (BPO) companies, this year appears to have heralded a change in fortunes.
Finally heeding the cries of foreign long distance telephony companies such as BT, AT&T, Cable & Wireless and Sify, the Telecom Regulatory Authority of India (TRAI) has decided to reduce the cable landing fees for these players by 50% from January 1, in an effort to be on par with the global cable landing fee structure.
This move is likely to reduce internet bandwidth charges by half – a boon for BPOs.
“We welcome Trai’s initiative of cutting cable landing charges by 50% for internet bandwidth. This move will enable us to boost add-on services in the BPO ecosystem,” said Susir Kumar, executive chairman, Serco Global Services.
Profits of BPOs have been on the decline with continued economic pressure and delayed client deal closures.
To beat this, BPOs have enlarged the scope of their offerings from traditional voice services to client servicing, consulting and managed services, taking on even some core functions of their clients.
With lower internet costs, the gamut of offerings can only get wider.
“This is a step in the right direction. Since communication charges would be built into the cost model of BPOs, reduction in internet bandwidth charges would enable the offering of higher-end services – like instead of going via a call centre, a consumer could get queries answered via the internet, with images and videos as well. Besides, the benefits may also be passed onto B2B clients in the form of cheaper services, which will also help to increase cost competitiveness among BPOs,” said Pradeep Udhas, partner and national head, IT-BPO sector, KPMG.
Praveen Bhadada, director-market expansion, Zinnov suggested a part of the savings could pass on to the clients. “Since the cost to transfer data will reduce by half, BPOs may pass on the benefits to consumers – being a more competitive industry – or may use it to increase their profitability by reducing operating costs.”
“Any cost reduction in international bandwidth charges will always be welcomed by the industry, especially IT and IT enabled services organisations. However, in this particular case, it is too early to determine the quantum of benefit that would be passed down by the service providers to the users. We will wait for the specific details of the order and action on the tariff by the service providers,” said Keshav Murugesh, group CEO, WNS.
Next on the agenda is a reduction in domestic internet bandwidth charges for local internet service providers.
In India, where internet penetration still has a long way to go, this would provide a much needed boost.