Fed rate cut to bring more business to IT and BPO
Service providers believe that the Fed rate cut will boost the US economy, thus bringing in more business for the IT-BPO companies.
By Deepshikha Monga & Harsimran Singh, TNN |
NEW DELHI: The IT and BPO companies expect to gain from the US federal reserve’s larger-than-expected 0.5 per cent cut in the benchmark interest rate. Service providers believe that it will boost the US economy, thus bringing in more business for the IT-BPO companies.
“The US economy may now be stimulated with the interest rate cut which will be good for business. We see more momentum going forward,” says N Ranjit, CEO, HCL BPO. ExlService Holdings president & COO Rohit Kapoor says there will be both positives and negatives to it.
“With the interest rates going down, it will negatively impact the cash balances of Indian companies as they will get lower interest. However, on the dollar-rupee exchange front, the general expectation is that the dollar would become softer and the Re would either appreciate or stabilise at the current levels, which will again negatively impact business,” he says.
However, he points out that American companies are beginning to outsource more work in a bid to optimise cost structures. “We are in dialogue with clients in the BFSI, telecom and transportation business for outsourcing more business,” he adds. Agrees Patni Computers marketing V-P Deepak Khosla, “We are seeing more momentum in the business. More and more clients are visiting us to see what new services can be offshored.”
While the rate cut would help the US economy tide over the sub-prime crisis, companies are doing post damage analysis, of what led to the crisis, and taking measures to avoid a similar situation in future. Says IT consulting firm Headstrong’s CEO and chairman Arjun Malhotra: “Clients in the banking and prime brokerage businesses are demanding greater accuracy in reference data, more efficient trading and greater compliance, which spells an opportunity for firms like us.”
IT analysts, however, have a different view. “While opinion is divided on the impact of the US slowdown, one thing is confirmed — IT-BPO companies will find it hard to negotiate higher billing rates this year,” says Harit Shah, IT Analyst with brokerage firm Angel Broking.
“With the interest rates going down, it will negatively impact the cash balances of Indian companies as they will get lower interest. However, on the dollar-rupee exchange front, the general expectation is that the dollar would become softer and the Re would either appreciate or stabilise at the current levels, which will again negatively impact business,” he says.
However, he points out that American companies are beginning to outsource more work in a bid to optimise cost structures. “We are in dialogue with clients in the BFSI, telecom and transportation business for outsourcing more business,” he adds. Agrees Patni Computers marketing V-P Deepak Khosla, “We are seeing more momentum in the business. More and more clients are visiting us to see what new services can be offshored.”
While the rate cut would help the US economy tide over the sub-prime crisis, companies are doing post damage analysis, of what led to the crisis, and taking measures to avoid a similar situation in future. Says IT consulting firm Headstrong’s CEO and chairman Arjun Malhotra: “Clients in the banking and prime brokerage businesses are demanding greater accuracy in reference data, more efficient trading and greater compliance, which spells an opportunity for firms like us.”
IT analysts, however, have a different view. “While opinion is divided on the impact of the US slowdown, one thing is confirmed — IT-BPO companies will find it hard to negotiate higher billing rates this year,” says Harit Shah, IT Analyst with brokerage firm Angel Broking.
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