KPO industry to grow 10-fold by 2010

The Indian Knowledge Process Outsourcing (KPO) industry is set to grow ten-fold by 2010, according to KPO industry representatives.

While the industry is stated to be fragmented, employing around 25,000 people in India at present, by 2010 this number is likely to grow to 2,50,000. KPO means offshoring of high-end services like research in intellectual property, equity and financial research, analytics and data mining.

Speaking at a seminar on 'From BPO to KPO and Beyond', organised by the National Association of Software and Service Companies (Nasscom), Sam Balaji, principal, Deloitte Consulting LLP, said, "The Indian KPO industry is evolving rapidly. The global KPO industry is likely to become worth $17 billion by 2010, with the Indian industry capturing between $12 billion and $14 billion of it."

According to Balaji, there are less than 10 big players in India in this segment with numerous small players. "But it has a revenue generating capacity that is three times more than that in the BPO sector. So, it is likely to grow ten-fold by 2010," he added.

Mohit Srivastava, assistant vice-president, Evalueserve.com Private Limited, said, "The KPO industry is growing at a rate of 50 per cent. At present, India has a market share of 55 per cent in the global scenario and we are likely to capture more than 70 per cent of this market share by 2010."

"Developed nations outsource knowledge processing to countries like India because there is shortage of knowledge professionals abroad. It also helps them reduce the cost pressures," Srivastava said, adding that companies are now moving from captive models to third party models to "absorb spikes in the workload."

Captive model refers to KPO within one's own company, while third party model means outsourcing the job to a different entity.

Srivastava also said, "One of the biggest challenges that the KPO industry has is with regard to talent. Companies do not want to nurture talent within the organisation and find it easier to poach people from other companies. But this adds to the woes of attrition."

He added that confidentiality, security and productivity are the other challenges within the industry.

Mudit Kulshreshtha, associate director, knowledge services, WNS Global Services (P) Limited, said, "The transition from BPO to KPO is not natural as there are different processes involved in each of them. We also need to be aware of the hidden costs involved in KPO because of, for instance, transition of high-end processes."

According to Uma Parameswaram, chief executive officer of SciTech Patent Art Services Private Limited, there is a great opportunity for Indian KPO companies in intellectual property research. "We need to push up our quality levels and bring down costs to move up the value chain," she added.