BPOs to ramp up onsite presence
Protectionist overtures of the US government has got the Indian BPO firms scurrying to gain its favour by revealing plans to increase their onsite presence in the next few years.
Protectionist overtures of the US government has got the Indian business process outsourcing (BPO) firms scurrying to gain its favour by revealing plans to increase their onsite presence in the next few years.
Infosys BPO, the BPO arm of Infosys Technologies, is planning to carry out close to 5-10% of its work from its onsite centres in the next few years. What this means is that the software company could now hire more locals at its offices in the country of its customers.
Today, Infy does not do any business processing work onsite - it is done entirely from its offshore centres in India.
Amitabh Chaudhary, CEO and managing director of Infosys BPO, says while the move is driven mainly by company’s intent to chase the onsite component of their global customer’s business processing deal, there is also a political angle to it.
“When we do business processing for global customers, there is always an onsite component in it. We want to take that up. It (onsite presence) also caters to the political demand (of the US government),” he said.
Last month, senators Dick Durbin and Chuck Grassley introduced a bill to amend the H-1B and L1 visa programme.
The bill proposes that employers who want to hire H-1B guest-workers should first make “a good-faith attempt” to recruit a qualified American worker.
Are Infosys and many others like it that are planning to improve the strength of their onsite team making “good-faith attempt” to recruit Americans?
Dr Ganesh Natarajan, global CEO of Zensar, says domestic companies are looking at higher onsite presence because they altered their business model, and if that fits into today’s political situation it works well for them.
“What I believe is that we are looking at is more consulting and process migration kind of work, which requires people to be closer to clients. If all this also takes care of our political compulsions, it is good for us,” he said.
The move to shift jobs to the US began with Sallie Mae announcing its plans to take back 2,000 jobs from its offshore facilities in India to the US early this year. Even Delta Airlines has said it will close down its call centre here to move it inhouse in the US.
Analyst Tien-tsin Huang of JP Morgan, in his report on IT-BPO sector, says such a trend has already taken root.
He said what has propelled it is the rising unemployment rates in the developed countries that may have resulted in increase in available workforce for lower-end call centre work.
“We think comparative cost advantages from offshoring may have decreased significantly in the current environment, specifically for low-end tasks that were already billed at much lower rates onsite,” he wrote.
So, how will higher onsite presence impact the margins and price competitiveness of Indian BPOs?
Pramod Bhasin, chairman of Nasscom, says it will not impact their profitability in a big way as the kind of onsite work that companies would be undertaking will have a better pricing model.
Zensar’s Natarjan says, “Our onsite work would be priced higher because of higher billing rates there.”
His comment indirectly implies India may lose some its price competitiveness as it tries to appease the US government.
Som Mittal, president of Nasscom, the association of Indian software and services companies, said the mix of offshore and an onsite worker for BPOs is expected change from 90:10 at present to 80:20 in the next 2-3 years.
BPO firms have seen a slowdown in growth due to falling demand from companies that have frozen most decision making except immediate cost cuts.
Infosys BPO, the BPO arm of Infosys Technologies, is planning to carry out close to 5-10% of its work from its onsite centres in the next few years. What this means is that the software company could now hire more locals at its offices in the country of its customers.
Today, Infy does not do any business processing work onsite - it is done entirely from its offshore centres in India.
Amitabh Chaudhary, CEO and managing director of Infosys BPO, says while the move is driven mainly by company’s intent to chase the onsite component of their global customer’s business processing deal, there is also a political angle to it.
“When we do business processing for global customers, there is always an onsite component in it. We want to take that up. It (onsite presence) also caters to the political demand (of the US government),” he said.
Last month, senators Dick Durbin and Chuck Grassley introduced a bill to amend the H-1B and L1 visa programme.
The bill proposes that employers who want to hire H-1B guest-workers should first make “a good-faith attempt” to recruit a qualified American worker.
Are Infosys and many others like it that are planning to improve the strength of their onsite team making “good-faith attempt” to recruit Americans?
Dr Ganesh Natarajan, global CEO of Zensar, says domestic companies are looking at higher onsite presence because they altered their business model, and if that fits into today’s political situation it works well for them.
“What I believe is that we are looking at is more consulting and process migration kind of work, which requires people to be closer to clients. If all this also takes care of our political compulsions, it is good for us,” he said.
The move to shift jobs to the US began with Sallie Mae announcing its plans to take back 2,000 jobs from its offshore facilities in India to the US early this year. Even Delta Airlines has said it will close down its call centre here to move it inhouse in the US.
Analyst Tien-tsin Huang of JP Morgan, in his report on IT-BPO sector, says such a trend has already taken root.
He said what has propelled it is the rising unemployment rates in the developed countries that may have resulted in increase in available workforce for lower-end call centre work.
“We think comparative cost advantages from offshoring may have decreased significantly in the current environment, specifically for low-end tasks that were already billed at much lower rates onsite,” he wrote.
So, how will higher onsite presence impact the margins and price competitiveness of Indian BPOs?
Pramod Bhasin, chairman of Nasscom, says it will not impact their profitability in a big way as the kind of onsite work that companies would be undertaking will have a better pricing model.
Zensar’s Natarjan says, “Our onsite work would be priced higher because of higher billing rates there.”
His comment indirectly implies India may lose some its price competitiveness as it tries to appease the US government.
Som Mittal, president of Nasscom, the association of Indian software and services companies, said the mix of offshore and an onsite worker for BPOs is expected change from 90:10 at present to 80:20 in the next 2-3 years.
BPO firms have seen a slowdown in growth due to falling demand from companies that have frozen most decision making except immediate cost cuts.