The boom in the business process outsourcing market has benefited overseas computer hardware manufacturers more than their local counterparts.
According to industry estimates, Indian hardware companies have lost business worth about $150 million on this count in the last one year to their overseas rivals.
This is because most BPO companies have located their operations in special export zones where they are entitled to import hardware free of duty.
At the same time, the lengthy procedures involved in sourcing from the domestic tariff area in the country makes these companies go for imports which are hassle-free.
"Procuring machines from the domestic market is a very time consuming procedure. Besides, we need faster movement of goods as the time cycle for ramping up capacity is very short for BPO firms," said an official at a Delhi-based BPO company.
For example, when a company from the domestic tariff area sells to an export oriented unit, it pays the duties as per the existing rates and later gets the benefits on it or gets a refund of the duties paid.
According to hardware companies as well as the BPO companies, the process is not only complex but also time consuming.
But in the case of import of machinery, the customs duty waiver is given at the point of export or sale, which is a much simpler procedure and fits well for the requirements of the call centre companies which require faster ramping up cycles.
As a result of this, many Indian hardware companies with BPO operations are forced to deploy machines from multinational vendors.
"BPO was perceived as a great business opportunity for Indian hardware companies. But the lengthy and cumbersome procedures have made it difficult for domestic companies to tap this sector," said Vinnie Mehta, executive director, Manufacturers Association of Information Technology.
"The call centre companies find it easier to import the machines rather than procure it from the domestic tariff area. Most of the information technology investments by call centre companies has gone to the multinational vendors," Mehta added.