BPO stocks fail to impress investors
Despite clocking amazing growth rates 30 to 40 per cent a year, the Business Process Outsourcing (BPO) sector has failed to attract solid investors. The mutual fund industry, which is otherwise quite desperate to leave its impression in virtually all sectors of the economy, is still keeping away from BPO.
This more than evident from the fact that Asset Management Companies (AMCs) like Franklin Templeton and Sundaram Mutual, in their latest New Fund Offers (NFOs), have covered everything from overseas companies to rural-centric enterprises. But AMCs have, apparently, always turned a Nelson’s eye to BPO.
“BPO is still a sunrise sector and, hence, there are certain apprehensions still attached to it. The risk in terms of its sustainable growth is doubted by many. The memory of the infamous IT bubble burst of 2000-01 is still fresh and this influences any talk of BPOs,” Sanjay Santhanam, Vice-President (Marketing & Sales) of Sundaram Mutual says.
Industry players also feel that BPO, as a sector, has still not matured enough in the country. “Companies dealing exclusively with outsourced work and who have been listed on the stock exchanges are also less in number. There are no quality stocks and most of these firms are subsidiaries of bigger companies dealing in an altogether different business,” pointed out Nisarg Trivedi of Franklin Templeton.
The AMCs are also not sure when it comes to visualising BPOs’ growth trajectory over the next 10 to 15 years. “Though the sector is growing rapidly, AMCs will wait and watch to see what stable dynamics BPO possess,” Nisarg added.
Nasscom, the software association, however doesn’t agree with most of these views.
“BPO now account for about 4 lakh employees with total exports of $5 billion. The industry is young, but not immature. Apprehensions about its future growth are also misplaced but, as we don’t deal with the stocks and exchange markets, I would not like to comment on the financial markets’ outlook toward BPOs,” Kiran Karnik, President of Nasscom, told.
Source : www.offshoringtimes.com
