Minimum wage is a Frankenstein for BPOs here: Sandip Sen, CEO, Aegis
BENGALURU: The domestic business process operations industry is warning of potential job losses as the government looks at bringing in universal minimum wage laws that could destroy the industry’s slender margins.
While the domestic sector has been working on growing its higher-margin businesses from ecommerce companies and banks needing to service their high-net worth customers, a significant chunk of the business still comes from servicing prepaid customers for telecom companies at rock-bottom rates.
“The majority of business can collapse at time. The minimum wage is a Frankenstein for us. I am really worried about a major part of the domestic BPO business,” Sandip Sen, CEO of Aegis told ET in an interview on the sidelines of an industry summit organised by Nasscom. Sen added that while it was true that sometimes wages were higher in sectors like manufacturing, he pointed out the domestic BPM industry employs people with few other marketable skills.
“We already make losses in some of our Tier 2-Tier 3 centres but if the minimum wage is set at a very high level, we could not sustain those losses,” Sen said. The Haryana government’s move to raise the minimum wage to Rs 18,000 is already leading the company to reconsider some of its presence in the state. A source with direct knowledge of Aegis’ operations said the company could look at shutting down some centres in the state, in locations like Karnal.
The industry also has to contend with moves by the central government to fix minimum wages for various sectors applicable across the country. Reports have pegged with minimum wage at Rs 18,000 per month, though the government has said that no decision has been taken.
“The government is taking a consultative process and we are participating in it. If they say that Rs 18,000 is the minimum wage for an engineer then it will work. But a wage like that for someone who may just have passed the 12th standard exams that would be a concern. We are presenting our views to them,” KS Viswanathan, vice president at Nasscom, said.