BPOs in city face imminent closure

Hyderabad, May 5: The United States president, Mr Barack Obama’s moves against job outsourcing coupled with the recession has made things difficult for 90 per cent of the 200 business process outsourcing (BPO) firms in the city.

Majority of sub-contracting BPO firms are dependent on the US and are not getting new projects in the last few months. Several are on the verge of closure and layoffs are imminent.
“My company is not getting projects from US and is about to close down,” said Mr Prakash Rao, an employee of a BPO firm.
“It is difficult to search for another career option as the job market is also down at this time of economic slowdown.”
Around 60 leading BPO firms in the city are operating on sub-contract basis and all of them feel the heat of recession. Two have closed shop and around 10 are on the verge of closure. They have issued pink slips to a majority of its employees as part of cost-cutting measures.
The most affected are the middle level employees and managers in many firms, though a few seniors have been given a minimal pay hike of two to five percent in a bid to retain them.
Top IT officials said that layoffs were natural in the BPO sector of the state in the wake of the US decision to cut tax sops.
“It would have its impact on the ITES sector as 90 percent of BPO firms in the state are dependent on the US,” said Dr.C S Rao, IT advisor to the state government. “But the situation would improve with increased productivity and customised solutions.”
The Hyderabad Software Employees Association (HYSEA) is not too wary of the US tax sop cut for job outsourcing firms.
“Denial of sops will definitely have an impact, but that would be minimal compared to the impact of economic recession,” said Mr.Narasimha, President of HYSEA.”In the next two years NASSCOM expects 30 percent growth.”