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 dollar in revenues by 2010-2011 at an annual growth rate of 39 per cent. Of this, India would account for 11.2 billion dollars, 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 dollars during 2000-01. This number has grown to 75,400 by 2006-07 with 3.05 billion dollars in revenue at an annual growth rate of 51 per cent.
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 dollar in 2006-07, a jump from just 7.7 billion dollar 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 third-party 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.
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India may have started off as the back-office of the world, however, by 2011 it will completely transform itself, accounting for two-third of the global Knowledge Process Outsourcing (KPO) sector, which is expected to create close to 1.8-lakh new jobs, so says a new study conducted by US-based business research and analytics firm Evalueserve. According to the study, the worldwide KPO market is expected to grow to $16.7-billion in revenues by 2010 – 2011, an annual growth rate of 39%, and of which, India’s contribution will be of $11.2-billion.
An industry that is growing fast, KPO will employ about 3.5-lakh professionals by March 2011 globally, of which nearly 2.55-lakh will constitute those in India. Currently, approximately 75,400 people are currently employed in India’s KPO sector.
Evalueserve’s research data is a reflection of how the KPO industry has progressed in India. In 2000 – 2001, there were only 9,000 billable professionals working for the KPO sector, generating revenues of $260-million. Today, an annual growth rate of 51% has seen the 2006 – 2007 numbers touch 75, 400, who generate $3.05-billion in revenues.
India’s runaway success in Business Process Outsourcing (BPO), a sector which pulled in $15.8-billion in revenues in 2003 – 2004, is the fore-runner of India’s anticipated success in KPO. Alok Aggarwal, Chairman of California-based Evalueserve believes, this huge growth in global KPO, will be driven by the vast pool of educated and experienced professionals in countries like India, China, Russia, Poland, the Philippines, Hungary and break-away Republics from the erstwhile Soviet Union.
While, BPO started a trend, whereby MNCs set up their own captive centres in India, China and elsewhere, KPO may quite likely see some KPO firms with their own captives, whereas others use third party vendors. Aggarwal strongly believes the KPO industry will follow a ‘hub and spoke’ model, whereby a provider in India constitutes the ‘centre’, while other global units operate as the appropriate ‘spokes’.
According to Evalueserve, in the near future, the global KPO industry is likely going to be driven by factors, such as, 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, taking into account study assumptions, particularly relating to controlled attrition, it could mean KPO generated revenues, may not exceed $9.9-billion by 2010 – 2011.
As well, lack of highly-educated professionals, such as, MBAs, chartered accountants, architects in India and other low-wage countries may affect the growth of the KPO sector. Banking, finance, securities and insurance research, data mining, analytics and contract research organisations, and bio-tech services are some of the KPO industry sub-sectors, expected to do well.
No doubt, India churns out more graduates and post-graduates than other developed or undeveloped countries. However, only a small segment of them are immediately employable, the employability of a large number of others remains in question. And, nowhere is it more evident than in middle and lower management levels. Due to high attrition levels, Indian BPO and KPO firms have no option, but to take on whatever drifts in their door. End result, the quality of manpower and management in most Indian IT / ITeS / BPO / KPO firms is mediocre and sub-standard.
It is fast becoming evident India has to work fast to improve the quality of graduates passing out of Indian universities and colleges, including the managerial skills of those the industry upgrades to management positions. Most of them, neither have the experience nor the maturity or the know-how of managing operations or staff. Little do people realise that a person’s background goes a long way to shape his personality. You cannot pick up a country bumpkin, who somehow has acquired a requisite degree, someone with neither good command over spoken or written English (the language of BPO / KPOs), nor even common etiquette to manage staff, some of whom may come from backgrounds more suitable for management level positions than his / hers.
And, no where is it more evident than in government sectors that follow the quota system. Does that not bring to mind all the scheduled castes, other backward classes that occupy positions of power, all thanks to reserved quotas for them, whether they can or cannot read and write. Not as bad, but quite as bad are the IT / ITeS / BPOs, where semi-literate, immature software developers, are suddenly elevated to managerial positions. And, many of them are unable to handle this boost to their ego, including an income they could not have visualised in an India, before the BPO boom took off.
India should place stress on quality not quantity, and till one is equivalent to the other, India will only stumble on, unable to realise its ambition of becoming the global BPO / KPO leader.