KPO Industry To Touch US$ 8 billion in 2011 and 10 billion mark by 2012 with a growth rate between 25-27% - Assocham

December 23, 2010 : The Associated Chambers of Commerce and Industry of India (assocham) has projected KPO industry’s size growing to US$ 8 billion in 2011 and 10 billion mark by 2012 with a growth rate between 25-27%, provided a strong chain of qualified professionals is built, opening up the field for bio and nano experts.

Currently, the KPO size is estimated to be around US$ 5.7 billion and the sector has grown @ around 15-17% in last few years, dominated by professionals belonging to fields such as management, medical, engineering etc.

According to ASSOCHAM, domestic KPO industry is facing stiff competition from countries like Philippines, Russia, China, Poland and Hungary as these are emerging strong contenders for KPO business in view of qualified KPO professionals, low-cost advantages, domain expertise, location advantage, sales and marketing capabilities and data compliance.

As per estimates made by the ASSOCHAM, a vast pool of highly educated professionals in engineering, medicines, management and professionals in the field of accountancy, company secretary, legal fraternity would be required to serve the industry.

KPO sector has potential to attract career aspirants and professionals as the sector provides revenues higher than the BPO industry. The salary ranges are 12-15% higher than the BPOs industry and even the entry level earnings are more in KPO industry.

The domestic KPO industry needs to tighten its service level agreements to provide quality services and also needs to attract more revenue by entering into partnerships with big financial service organisations. While some of the Indian companies are coming out with the security framework which simultaneously increasing costs of industry and make them less competitive. Overseas clients often hesitate to offshore research and processing of sensitive financial data and information involving strategic decisions.

The KPO sector deals with confidential data, including financial data, treasury and cash management functions and investment portfolio decisions and needs to address the issue of data security raised by international clients

The Paper also predicts that KPOs has also other advantages like better work tools and processes, more sophisticated client centricity, higher billing rates and more domain focused organisations.

Small and Medium Enterprises (SMEs) are likely to be the major growth drivers for the KPO sector. According to estimates, out of the 10 million SMEs in US and Europe, about 10-12% can benefit from KPO services due to reduced complexity, ability to compete effectively with small and large competitors, shorter time to market, higher flexibility, overall lower costs and potentially higher quality for the same costs.

In fact, in the near future, KPO is likely to be driven by factors like breadth and depth of coverage, domain expertise, location advantage (e.g., near-shoring and language capabilities), sales and marketing capabilities, data compliance with respect to regulatory standards (especially those defined by the United States, Canada and the European Union) and the management of business risks.

Therefore 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 “center” whereas other units in the world may provide appropriate “spokes.”

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