Is India slowly and gradually moving towards the KPO regime?

here is no doubt that KPO will be the next big thing after BPO. KPO unlike BPO is not just restricted to information technology. It specializes in various other challenging sectors namely business research, Clinical research, Intellectual property research etc.

The KPO exports are estimated to be around $12 billion at the end of 2010. The future of KPO appears to be bright and is expected to achieve a high end of BPO at the end of 2010. The KPO regime looks all set and poised to accept the new challenges of high training cost and a much higher attrition rates. The shorter term contracts will demand high quality work and skills on part of its workers. KPO industry has accepted all these challenges and is all set to leave a mark just like the BPO brigade.

Why I have focussed on India's short-term challenge of competing with other nations for leadership by 2010, some of the best minds in the world are already actively working on making India a knowledge driven nation by 2020.

The Indian prime minister has constituted the National Knowledge Commission, with the mandate of devising and guiding reforms that will transform India into a strong and vibrant knowledge economy in the coming years. The commission was formally launched on August 2, 2005 under the chairmanship of Sam Pitroda and has already issued a report on e-governance.

The World Bank has launched a report titled India and the Knowledge Economy: Leveraging Strengths and Opportunities. The authors, Carl Dahlman and Anuja Utz, summarised their findings as follows:

"In sum, India is well positioned to take advantage of the knowledge revolution to accelerate growth and competitiveness and improve the welfare of its citizens and should continue to leverage its strengths to become a leader in knowledge creation and use."

where KPO agents earn 46 per cent more than BPO executives. Whereas, an Indian BPO exec earns about $6,000 a year, his KPO friend is sure to earn anywhere above $8,800 – a huge 46 per cent difference. The figures were released in a recent survey on the KPO sector by Evalueserve.

The salary gap is not limited to BPO versus KPO. Whereas, a fresh MBBS or lawyer earns Rs 1.5 lakh annually, a KPO offers much more, almost 500 per cent more!

Says Rohit Dogra, assistant vice-president, analytics at Evalueserve: “Fresh doctors and lawyers take home a cool Rs 6-8 lakh salary package at KPOs. MBAs from non-IIM institutes take home Rs 3-5 lakh per annum. The yearly package for fresh IIM grads is certainly higher at Rs 4-6 lakh p.a. Obviously it shoots up for candidates with domain experience.”

Economists and statisticians are also greatly in demand for data modelling and analysis.

By 2010, India would be leading the world in KPO. The most sought after will be professionals well versed in data search and management. Biotech and pharma graduates will also be in demand.

While data search will constitute 29 per cent, pharma and R&D will form 18 per cent of the $17-billion global KPO pie. India will have a major share – about 70 per cent of it. Other hot areas will be animation, publishing, remote education, VLSI (Very Large Scale Integrated) chip and engineering design.

Due to a 12-hour time difference between the US and India, a KPO vendor can provide a 24-hour work cycle to the US client.

Outsourcing can lead to peak absorption. It’s very difficult for a firm to hire employees just for peak seasonal cycles which may be from three months to a few weeks. KPO vendors ease this problem by diverting 10-12 to a different project for certain part of the day.

The maximum share of value creation goes to clients. It cuts costs by 40-70 per cent and improves quality tremendously.

According to the survey, 30 per cent of the revenue of a typical KPO vendor is retained in the form of profits. 35 per cent goes to employee costs. The balance 35 per cent goes to overhead costs like transportation, food, telecom, security, etc.

For the client, outsourcing creates 32 per cent more value, which may go into increasing bottomlines or creating core competencies to bypass competitors. It’s a big benefit for SMEs.

At present, around 25,000 professionals are employed in the KPO industry. The figure is expected to shoot up to 2.5 lakh by 2010.

In the future, it’s KPO which will be the leading edge of India and highly skilled professionals are sure to have an upper hand.