Rupee appreciation, MAT may harm BPO industry

New Delhi, June 7: India might lose its status as an attractive outsourcing destination due to strong appreciation in rupee coupled with imposition of Minimum Alternate Tax on IT firms introduced this fiscal.

"India is still the most attractive outsourcing destination for global companies but 2-3 years down the line, it (India) may lose this to other low-cost countries," Nasscom President Kiran Karnik told the media here.

He said the recent changes in the government policies such as imposmodation are a matter of concern.

When wage costs in the country are rising due to rupee appreciation, the companies need some incentives in the form of tax breaks, Karnik said.

"We need to take some action regarding this and send positive signals to the world to keep India as the best outsourcing destination," he said.

Karnik said a lot of companies, including the country's largest software exporter TCS, have already started looking outside India for outsourcing their work.

TCS today said it would hire 5,000 people in Mexico over the next five years to serve US clients, as labour costs at home were rising.

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