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M. Karunakaran

Billing blues.

Moumita Bakshi Chatterjee

First the looming slowdown in the US, then the currency fluctuation, and now, BPO companies in India are struggling to cope with the spike in prices of petrol and diesel.

With the Government announcing a Rs 5 a litre hike in petrol prices, and Rs 3 a litre in diesel prices, the BPO companies expect costs — both transport and power — to head northwards. Hence, they are scrambling to rationalise routes, are m ulling greater use of buses, and taking a closer look at cab utilisation, to tide over the crisis.

“Transport costs are a significant portion of our overall costs. We spend close to Rs 3,500 per employee per month on transport. With the rise in fuel costs, our transporters are sure to ask for a hike. It will certainly hurt our bottom line,” says Vipul Doshi, CEO of InterGlobe Technologies.

His company is looking at using buses instead of cabs for day shifts, besides ensuring proper utilisation of the existing cab fleet. “We will ensure that the cabs are filled to capacity. In addition, we are looking at aligning the shift timings in a manner that best utilises our cabs. While the fuel price hike has pushed up our transport costs by 5 per cent, we will be able to reduce this escalation to 2-2.5 per cent through the new optimisation measures,” Doshi adds.

Pramod Bhasin, Vice-Chairman of Nasscom, and CEO and President of Genpact, says the price rise is a ‘reality’ for BPOs and companies will have to find ways to drive efficiencies. “Companies are not using sophisticated logistics solutions that can bring improved efficiency by optimising routes. These have to be well-thought-out strategies for BPO companies,” he says.

Raman Roy, founder of Gurgaon-based Quatrro, agrees that the costs of transport will definitely go up, and says the impact will be felt in the next six-nine months. “Besides transport, BPO companies will also feel the heat on power costs as they use generators for a significant part of the day. There will be a 20 per cent increase in power costs on account of the increase in diesel prices.” However, says Roy, his company will absorb the costs.

According to HCL BPO, the fuel price hike will push up overall costs by Rs 1.3 crore per year. “The impact will be more in Noida than Chennai as the power situation in the Delhi suburb is pretty erratic. The company has a back-up, including battery-generated power and stand-by generators. However, while the costs are set to rise, it will not impact our margins,” says Ranjit Narasimhan, President & CEO, HCL BPO.

Narasimhan says that HCL BPO has effectively leveraged the business model dynamics to offset any rise in costs, in the past. “The costs will keep rising, on account of electricity or wage inflation and other factors, but we need to sustain competitiveness by moving to high value-added services, moving from input-based pricing to output-based pricing, amongst others,” he says.

moumita@thehindu.co.in

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The ride gets hotter for BPOs

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