Could the recession in the United States affect the Indian BPO sector badly?
The possible recession in US has, both, positive and negative effects for the BPO sector in India. On the positive side, the need to cut-costs and enhance margins will accelerate the off-shoring of outsourcing of business process which will have a beneficial effect. However, the uncertain economic climate in the US may delay the decision process on outsourcing which may have a negative impact on the growth of the Indian BPO sector. In sum, the BPO industry in India will continue to grow, though at a marginally reduced rate. How much does the industry suffer every time the rupee gets stronger against the dollar? It has been estimated that every one percent appreciation in the value of the rupee impacts the profitability of the BPO industry by 35 basis points (0.35 per cent). Similarly, every percentage of depreciation in the value of rupee will enhance the profitability by 35 basis points. The change in the value of rupee is one of the many parameters that are factored into the business
