INDIA, already known as the back office of the world, will account for two-third of the global Knowledge Process Offshoring (KPO) segment that could create up to 1.8 lakh new jobs here by 2011, a new study has said. The worldwide KPO market is expected to grow to $16.7 billion in revenues by 2010-2011 at an annual growth rate of 39%. Of this, India would account for $11.2 billion, according to the study by business research and analytics firm Evalueserve.
The industry would employ about 3.5 lakh professionals by March 2011 globally. This includes nearly 2.55 lakh in India, where only about 75,400 people are currently employed.
According to Evalueserve, the KPO industry in India had only 9,000 billable professionals in India, generating revenue of $260 million during 2000-01. This number has grown to 75,400 by 2006-07 with $3.05 billion in revenue at an annual growth rate of 51%.
The anticipated success in KPO comes after the success of Business Process Outsourcing (BPO) in the country, which accounts for revenues of $15.8 billion in 2006-07, a jump from just $7.7 billion in 2003-04. This huge growth in the global KPO space would be driven by the vast pool of educated and experienced professionals in countries like India, China, Russia, Poland, the Philippines, Hungary and many republics from the erstwhile Soviet Union, California-based Evalueserve’s Chairman Alok Aggarwal said.
It is quite likely that companies — both with their own captives and those using thirdparty vendors — may use a “hub and spoke” model in which a provider in India may constitute the “centre” whereas other units in the world may provide appropriate “spokes”, Aggarwal said. Evalueserve said in the near future, KPOs are likely to be driven by factors like breadth and depth of coverage, domain expertise, location advantage, sales and marketing capabilities, data compliance with respect to regulatory standards and management of business risks. However, the study took some assumptions particularly for controlled attrition, in which case the KPO industry may be able to generate no more than $9.9 billion in revenues by 2010-11.
Also, lack of highly-educated professionals such as MBAs, chartered accountants and architects in India and other low-wage countries may affect the growth of the KPO sector. The sub-sectors within the KPO industry that are expected to do well are banking, finance, securities and insurance research, data mining and analytics and contract research organizations and biotech services.