The Knowledge Process Offshoring (KPO) industry in India is likely to grow to US $11.2 billion in revenue by 2010-11 and is expected to employ approximately 255,000 professionals by March 2011, according to a study by Evalueserve. Among low-cost destinations, India will become the hub for providing research and analytics services. Today, the most significant barrier to growth is attrition among young professionals.
Almost two-thirds of professionals working in the KPO industry worldwide will be based in India, especially because this industry requires substantial domain expertise among professionals who are Doctors, Engineers, MBAs, Graduates in Science and Technology, Certified Financial Analysts, Accountants, Statisticians, Lawyers, Economists and Chartered Accountants.
KPO includes domains, such as Business Research, Intellectual Property & Legal Research, Investment Research, Market Research and Data Mining.
KPO landscape in India
Currently, at least 12 firms provide KPO services and have KPO as part of their name. Moreover, there are at least five annual conferences worldwide that are solely about KPO. About 120 captive units of large multinational companies are providing KPO services to their offices in North America and Europe; and there are more than 280 "niche" companies in India providing third-party KPO services.
51% growth in revenue generated
Evalueserve’s research shows strong growth in the KPO sector in India. During 2000-01, India had 9,000 billable KPO professionals generating total revenues of US $260 million. By March 2007, employment had grown to 75,400 and revenue to US $3.05 billion. This implies a cumulative annual growth of 51% with respect to revenue and 43% with respect to the number of billable professionals during the last 6 years.
Fastest-growth segments
The Evalueserve study predicts the fastest growth, in terms of the number of professionals, in the Data Management, Searching and Analytics sector, which is expected to generate revenues worth US $2,500 million and employ about 60,000 professionals in 2010-11. This would be closely followed by the Contract Research, Biotech and Pharmaceutical Services sector, which is expected to generate US $2,500 million in revenue and employ 50,000 people by 2010-11.
Challenges
Although the KPO sector is one of the hottest sectors in India and has created substantial job opportunities for professionals, it is also facing the challenge of high attrition rates. This can be attributed to excessive job-hopping by young professionals who want to earn quick money within a short span of time.
Unlike in BPOs, where skills are taught in a few days or weeks and the work is very process oriented, repeatable, scalable and does not require the worker to be near the client, KPOs require professionals who have an in-depth knowledge, experience and judgement skills in their domains.
According to Evalueserve’s estimates, job-hopping not only leads to reduced productivity, but also has an effect on the overall growth of a professional, leaving very little room for new learning and acquiring domain expertise. This leads to lower compensation (for such professionals) in the long run. If attrition continues unabated, it will be the sole factor responsible for a decline in the revenues of the Indian KPO sector by 2010-11. Such a scenario would ensure that some other competing countries -- China, the Philippines, Poland and Russia -- get a larger share of the global KPO market.
Evalueserve as a case study
According to Dr. Alok Aggarwal, Chairman and Co-founder of Evalueserve, "Professionals who joined us after graduating in various disciplines 3 years ago and stared with an annual salary of 4 lac rupees have now grown up to manage significantly large teams of around 30 or more professionals and may be easily earning twice as much. Furthermore, some of them have even visited clients in other countries while conducting projects, and there are several instances where some of them have even moved to our research centres in China and Chile for one to three years. This speaks volumes with respect to the tremendous growth opportunities offered by the KPO industry but only as long as professionals continue to grow with the same company rather than hopping from one job to another."
Evalueserve
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