Telco price wars hit BPO margins
The plethora of new pricing schemes from telecom companies, like ‘one paisa per second’ billing, has squeezed the margins of their business process outsourcing partners.
Telcos typically outsource work on customer service (voice) and some back-office operations. BPOs get 70 per cent of their revenue from voice alone. However, Indian telcos are witnessing a dip in volumes and calls due to the pricing and other wars for customer share in an already crowded market. Telcos are now asking their BPO partners for price reductions of 9-15 per cent to protect their own margins.
Since the revenue model of BPOs is subscriber or call-linked (the more calls they take in a day, the higher their revenue), a fall in these impacts their bottom line. Hinduja Group’s BPO arm, Hinduja Global Solutions, is a case. Its net profit for the third quarter (October-December 2009) was down 20 per cent sequentially. It said one reason was the pricing war among telcos.
