Typical users of KPO services are Market Research and consulting firms, investment
banks and financial services institutions, and corporate planning departments of
large Fortune 500 companies.
Given the large number of engineers, doctors, lawyers, chartered accountants, statisticians
and scientists in India, Evalueserve believes that India can provide KPO services
worth USD 12 billion by FY 2010 instead of services worth USD 720 million that it
provided in FY 2003. This would represent a cumulative annual growth rate of approximately
50%.
EVS Contact
PRCC Tel: +91 124 4154000
pr@evalueserve.com |
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Knowledge Process Offshoring (KPO) Opportunity to be Worth USD 17 Billion by 2010
New Delhi, India – 13 July 2004: According to business research firm Evalueserve,
the revenue for the global KPO market was USD 1.29 billion in FY 2003 and this is
expected to grow to USD 17 billion by FY 2010, a cumulative annual growth rate of
46%. In contrast, the revenue from plain vanilla BPO services will grow from USD
7.7 billion in FY 2003 to USD 39.8 billion in FY 2010, a cumulative annual growth
rate of 26%.
KPO involves business processes that require domain expertise and high-end talent
such as MBAs, engineers, doctors, lawyers, accountants and other highly skilled
professionals. "KPO requires moving away from simply executing standardised processes
to carrying out processes that demand advanced analytical and technical skills as
well as some decision making," says Alok Aggarwal of Evalueserve. Some of the destinations
from where KPO services are being provided are India, China, Russia, Canada, Israel
and the Philippines.
Typical users of KPO services are Market Research and consulting firms, investment
banks and financial services institutions, and corporate planning departments of
large Fortune 500 companies. These services can also be easily used by small and
medium-sized enterprises due to the project-based nature of the work.
Some examples of services in the KPO domain are intellectual property research,
R&D in pharmaceuticals and biotechnology, data mining, and a range of analytical
services such as equity research and financial modelling.
Writing patent applications in the US is expensive and a typical application costs
between USD 10,000 to USD 15,000 for drafting and filing with United States Patent
and Trademark Office (USPTO). In an offshore mode, an intellectual property specialist
at an offshore location can produce a preliminary draft of a patent application,
which is then reviewed and modified by a registered US patent attorney who ultimately
files it with the USPTO. This can result in cost savings of up to 50%.
In the R&D area, contract research organisations are being widely used by pharmaceutical
companies. Destinations such as India offer significant cost advantages – often
as much as 40% to 60%. Recently, companies such as AstraZeneca and Glaxo-Smith-Kline
have set up drug discovery centres at low-cost destinations to offshore R&D.
In the area of data mining and analytics, destinations such as Russia and India
are ideal because they provide a large pool of engineers and PhDs at substantially
lower costs. The cost differential between a PhD in Sciences and Engineering in
the US and India (or between the US and Russia) can range between USD 60,000 and
USD 80,000. "Demand and channel planning, manufacturing scheduling, and transport
planning are examples of some supply-chain management solutions that require the
use of mathematical programming, statistical analysis and computer-aided simulations,"
says Alok Aggarwal, who holds a PhD in mathematics and computing.
Given the large number of engineers, doctors, lawyers, chartered accountants, statisticians
and scientists in India, Evalueserve believes that India can provide KPO services
worth USD 12 billion by FY 2010 instead of services worth USD 720 million that it
provided in FY 2003. This would represent a cumulative annual growth rate of approximately
50%. Additionally, 250,000 such professionals are likely to be hired by Indian KPO
providers by FY 2010, which would therefore provide direct employment to 300,000
people.
Benefits go beyond simple cost savings. KPO users typically save on time and also
have a greater access to various skills. In many cases, providers also offer multi-lingual
research capabilities.
However, executing KPO projects is not easy and requires a professional services
culture rather than a BPO culture. Processes executed within the KPO domain require
higher quality standards as the stakes for the clients are high. Furthermore, the
clients are likely to be apprehensive about the quality of the services delivered
(especially by low-cost destinations) and these may be difficult to alleviate. To
manage these perceptions and ensure smooth delivery, vendors work in an ’80-20’
mode, which involves providing leverage to senior professionals.
"Another key challenge in the management of a KPO is the identification of performance
criteria – setting the right expectations with the end-client as well as its professionals,
continuous assessment and monitoring, constructive feedback, appropriate coaching
and mentoring and identification of right career paths for its professionals,” says
Marc Vollenweider of Evalueserve, a former partner with McKinsey.
However, these factors will not impede the growth of the KPO industry. In fact,
the protectionist lobby and their anti-BPO drive in the USA and the UK have helped
global offshoring and, in particular, global KPO by providing free publicity. Evalueserve
estimates show that between 1 June 2002 and 31 May 2004, India Inc. alone received
more than USD 89 million in free publicity from more than 1,980 distinct articles
in newspapers and magazines and over 210,000 distinct references and ’threads’ in
the USA and UK. Hence, many American and the British companies now feel that Indian
companies can do almost anything, including rocket science!
Evalueserve Overview
Evalueserve offers high-quality knowledge services in Investment Research, Business
Research, Intellectual Property, Market Research, and Data and Financial Analytics
to clients worldwide. Founded in 2000, it has more than 1,500 employees, with operations
centres in India, China and Chile, and a strong sales presence across all major
global locations. Evalueserve won several awards in 2006, including Red Herring
Asia Top 100, NASSCOM IT Innovation Award for Business Model Innovation and the
Deloitte Fast 500 APAC Award.
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