BPO, mid-size companies to be strongly hit by Re impact

The country''s BPO sector will continue to face the brunt of the appreciating rupee which will hit margins by 0.2-0.5 per cent in the coming quarters, top industry players today said. ''''BPO and small companies are likely to bear the brunt of rise in rupee in comparison to bigger software firms as they are working on strategies and have additional levers to reduce the impact on profitability,'''' Nasscom Chairman and Cognizant Technology Solutions Vice Chairman Lakshmi Narayan said.

To help offset the impact, government should extend the STPI scheme to such companies just like other export oriented units, he added. The industry is continuously evaluating the impact of the rising rupee, outgoing Nasscom chief Kiran Karnik said, adding that there is no impact on Indian IT companies topline but for every one per cent change in rupee there is 20-25 basis points (bps) change in profitability. ''''The BPO industry will be strongly hit,'''' he added. The bigger companies are managing to offset the rupee impact through their operational efficiency and gain in supply, Kanrnik said. The supply side is improving and there will be a moderation in the wage structure from next year which in turn will help improve the situation, he added. ''''The government have been very supportive and has played a active role in taking IT industry to heights,'''' newly appointed Nasscom chief Som Mittal said, adding that India will become a knowledge capital of the world.