The Hindu Business Line : Mr Raghu Vasu A., CEO of Transdyne; Badruka Institute of Foreign Trade

Hyderabad, Sept. 26 While the global economic slowdown is bound to have a significant impact on the Indian IT/BPO sector, there are a few positives to look forward to, said Mr Raghu Vasu A, Chief of Transdyne, a medical transcription company.

For example, the merger of Merrill Lynch with Bank of America will throw up opportunities for Indian IT companies in terms of building IT infrastructure. Similarly, the selling of Lehman Brothers business to different players, will open up new avenues of integration, he added.

In the domestic market, IT firms would be forced to come up with affordable solutions for users as prices will fall, he said while delivering a lecture organised by the BL Club at the Badruka Institute of Foreign Trade (BIFT).

Impact on IT/BPO

Since the Indian BPO industry depends largely on the BFSI sector (banking, financial services and insurance), the US slowdown impact can be high, Mr Raghu felt.

It would mean contract terminations, less renewals, cuts in jobs, and pricing pressures. While US companies would postpone upgrades or desist addition to new systems, IT companies in India would face the heat. Similarly, on pricing, he said while the billing for SAP was $130 a hour a few months ago, it would fall to less than $100 a hour, he said.

Since nearly two-thirds of revenues of Indian BPOs come from the US, the impact on small-and medium-sized players would be high. They typically have few clients/industry segments. Therefore, they are prone to take the maximum hit, he said.

Companies would be bound to pass this pain to clients, customers in the form of job cuts, salary cuts, etc. This, in turn, would have a trigger effect on other sectors such as consumer goods, and housing.

‘Focus on academics’

Since the job market will get tougher in the near future, it would be wise for students to focus on academics. “Be competitive and benchmark against the best”, advised Mr Raghu.

Last year students were thinking of a job the day they joined a course. It could no longer be true now. You should realise that life is not an unending honeymoon. The one’s who graduate in a recession time are perhaps the most resilient, therefore make best use of the opportunity, he added.

Mr S.K. Mathur, Director of the BIFT, explained the growth of the BPO sector and the opportunities that it threw up in the last few years. However, the recent developments have confronted the sector with fresh challenges and questions that need to be seriously looked into.

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