The uncertainty in the US and Europe will not affect the showing of the $17-billion BPO industry, as, unlike IT, the back-office business depends largely on the ‘non-discretionary' spends of clients. That was the argument resonating, loud and clear, at the Nasscom BPO Strategy Summit 2011 here.

The summit comes at a time when global macro indicators are worsening, triggering fears of a cut-back in tech Budget and business volumes.

“We are different from IT…We do not depend on ‘discretionary budgets' which tend to be variable. Our presence is in actual processing work, which is a day-to-day function that client will continue to perform…Ours is an annuity business which cannot be taken back overnight,” Mr Vikram Talwar, Chairman of EXL Services, said.

If anything, Mr Talwar felt that the cost pressures will drive clients to outsource more to BPO companies. “There is no reason why growth of 15-20 per cent cannot be achieved by the industry,” Mr Talwar said, claiming that neither EXL nor the industry will scale down hiring targets.

Aegis, meanwhile, said it plans to hire 4,000 (on net basis) between now and March 2012. Hinduja Global Solutions wants to recruit 3,000 workers during the period.

Some could feel the heat

Stressing that the BPO industry was relatively more insulated from global headwinds, Mr Raman Roy, Chairman and Managing Director of Quattro BPO Solutions, said that 90 cent of the business flowed from “non-discretionary spends”.

“The discretionary aspect in BPO is very less, so uncertainty will not hit our business. However, if there is a recession and businesses shut down, then, of course, there will be an impact. At present there are no signs of that happening,” he said.

Mr Roy said that achieving 20 per cent growth was not difficult for the BPO industry.

However Dr Partha Desarkar, Global CEO of Hinduja Global Solutions, said that BPO companies that were heavily leveraged or not diversified (in portfolios or markets) could feel the heat.

“IT spends tend to be in the nature of capital expenditure whereas BPO is more an operating expenditure, and the latter is not subject to uncertainties on a quarter-on-quarter basis. But there are companies where debt is a big issue…companies whose portfolios are not diversified and they certainly need to watch out,” he said.

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