Cost of outsourcing may creep up!

The Mumbai terror attacks couldn’t have come at a worse time for the $50-billion IT BPO industry.

Though many industry honchos feel that the IT BPO sector may now see a further slowdown in new business and client visits, others feel that clients will now look at setting up disaster recovery centres as an integral part of strategy which will lead to an additional cost burden.

Most industry leaders are still unanimous that the perception of India as an outsourcing destination will remain unchanged. There will, however, be a short-term impact. Employee security will also be beefed up further. Experts also add that there will be fewer overseas customer visits, at least in the short term, delaying due diligence process, which will impact new business in the short term.

“Outsourcing as a business strategy is inevitable in the long term. But in the short-to-medium term, we will definitely see the cost of outsourcing go up. This is because vendors will have to provide centres in multiple cities in order to have a strong disaster recovery and business continuity strategy. This will make the cost of outsourcing go up,” says Avinash Vashishtha, CEO of Tholons, an outsourcing advisory firm.

The apex body for IT and BPO industry Nasscom, however, said all its offices will remain open. “We have some global events lined up in Hyderabad which are on track. We will not bow down to terror. The industry has put in business continuity plans to ensure 24/7 operations. We are confident that the government is dealing with this issue very strongly. The city of Mumbai is resilient and will rise from this crisis as have all the other major cities,” said Nasscom President Som Mittal.

Some Mumbai-based BPOs say that they continue to operate though with less staff. Some BPOs like Firstsource diverted its call traffic to its locations in other cities.

“We have our disaster recovery centres in different cities so calls have been diverted there thus having less impact on business. We also have our offices in Malad and Vashi where business is going on. Clients also understand that terrorism is not limited to certain geography and we will not see an impact in the long term,” says Firstsource CEO Ananda Mukherji.

On the other hand, WNS, which is one of the largest international BPO headquartered in Mumbai is monitoring the situation closely. “Our staff members are safe and client operations at our Mumbai units have not been adversely impacted. Our business continuity management team is monitoring the situation. We are taking all precautionary steps to ensure the safety of our staff members in addition to ensuring continuity of business operations,” says group COO Anup Gupta.

Meanwhile, India’s largest BPO, Genpact also discounts claims that client perception will get impacted in the long term. “When unprecedented situations like these come up, the first thing that we try and ensure is that our employees are safe in the affected region and assurance to customers that deals will remain unaffected. Our business continuity plans are well in place,” says Piyush Mehta, senior VP and HR head, Genpact.

But there are some industry honchos who disagree, as well. According to Raman Roy, CEO of Quattro BPO, it would be wrong to say, that the massacre in the commercial capital of the country will not affect business.

Source: Times of India