KPO to grow 63% to $32.5 bn by 2014: Frost & Sullivan

Knowledge process outsourcing (KPO) will be a $32.5 billion industry employing 4,10,000 professionals by 2014, registering a CAGR of 63 per cent, indicated a recent Frost and Sullivan report. The study beats the earlier projections, which had pegged the growth of the sector at around $8 billion by 2010.

A fast-growing industry, KPO currently is a $650 million industry (from $400 million in 2005) and employs close to 10,000 professionals. KPOs are active in business research (32 per cent), banking, financial services and insurance (BFSI -- 26 per cent), pre-media (25 per cent), business intelligence (9 per cent), intellectual property rights (3 per cent), pharmaceuticals (1 per cent) and others like the emerging legal process outsourcing (1 per cent), the study noted.

"Existing players are expanding their businesses and new players are entering the industry. MNCs are outsourcing analytics and research through third parties or set-ups in India. Besides, IT and BPO companies are moving up the value chain," said Saurabh Kaushal, industry manager, ICT practice, Frost and Sullivan.

Ravi Challu, vice-president, marketing, MarketRx -- a company focusing on the marketing, sales and operations of pharmaceuticals shares -- concurred, "Currently, we are a $30 million company and by 2010, we will be a $100 million company, having a CAGR of 40 to 50 per cent for the last six years."

KPOs are exploring new avenues of growth, said Madhusudan Rajagopalan, director of Aranca India Operations, a two-year-old company providing high-end investment, business and research services. "KPOs are expanding their service offerings and creating new niche specialisations and verticals, which have great revenue potential," he added.

Integreon -- a KPO providing research, analytics and information services to leading investment banks, equity research and brokerage firms -- has a similar growth experience. "We are growing at 50 per cent each year and expect to maintain that for the next couple of years," said Lokendra Tomar, vice-president, knowledge services, Integreon.

However, the industry faces a challenge of scaling operations. "We are working on highly subjective and judgemental processes (outputs). As such, defining quality and achieving scale are a challenge. To grow rapidly, we need to achieve standardisation and evolve an industry model," noted Tomar, who currently employees 1,000 people in his company.

With the industry still in its infancy, the key to survive "is to keep reinventing the people processes and strategies in the fast-changing industry", advises Challu.