Mumbai: Individual outsourcing deals in the BPO sector have shrunk to less than $25 million, or about Rs 100 crore, according to the Q3 index released by the US-based Technology Partners International (TPI) Inc, pointing towards a bleak demand scenario for outsourcing business processes in the US and Europe.
TPI Inc is an outsourcing advisory firm that structures more than one fourth of global outsourcing deals. A TPI partner in India could not immediately throw light on the reasons behind the trend.
Industry experts generally believe that market downturn in the West would boost demand
for outsourcing.
"The assumption that downturn may be good for Indian IT and ITeS sectors may be flawed. One needs to see it from a macro-economic perspective. The effective unemployment in the US, for instance, is to the tune of 17.5%. That's huge number which has impacted people spending pattern. So, people in general in the West are not spending on travel, consumer and lifestyle goods, etc," Alok Shende, a telecom and IT sector analyst and founder of Mumbai based research firm Accendia Consulting told DNA Money.
"Thus the transactional volumes in airlines, banks, telecom operators and others have gone down. This, in turn, has prompted businesses to put curb on outsourcing."
Recently, Genpact, the biggest outsourcing firm in India by revenues, posted a 1.7% decline in net profit at $33.1 million for the third quarter of the current fiscal from $33.6 million in the previous comparable quarter.The company reported a revenue of $284.4 million during the quarter under review, up 5% from $270.8 million in same period in 2008. Genpact, however, maintained its operating margin guidance of 17.5% to 18%. "We see encouraging signs in the market. Client demand is coming back, decision making is improving and our pipeline is strong," Genpact president and CEO Pramod Bhasin had then said.


