THE GROWTH OF KPO INDUSTRY IN INDIA

Points to be discussed
Knowledge Process Outsourcing – Overview Difference between KPOs and BPOs KPO Sector SWOT Analysis Growth drivers of KPO sector Why Choose India Top 10 Indian Companies India’s KPO Market Trends Bottlenecks in Future Growth Conclusion

Knowledge Process Outsourcing (KPO) Overview
 KPO is a form of outsourcing, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost.  KPO’s have evolved from BPO’s.  KPO’s were introduced in India by McKinsey when it first set up a knowledge center in India in 1987.  But KPOs actually started coming up in India in 2000 when many companies like OfficeTiger, GE, Gartner, etc opened their research centers here.  Some of the hot destinations for KPOs other than India are Russia, China, Czech Republic, Ireland and Israel.

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Knowledge Process Outsourcing - Overview

K.P.O
KPO jobs are more challenging as it needs process expertise. KPO requiers domain knowledge and business expertise.
PEOPLE

Highly Value Added Process Chain

In turn, requires analytical and highly specialized skills.

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Segments Associated With KPO

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Current KPO Market Trends

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Progression to KPO
1990’s IT/ITES
IT Services System Analysis Network Design Sortware Implementation  System Integration  R&D  Report Network Management    

1998 BPO
 Transaction processing  Selling Insurance polices  Technical support  Voice and Email support    

2000 KPO
Business Research Investment Research IP Research Legal Process Outsourcing  Data Analytics and Financial Analytics

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Difference between KPO and BPO
KPO BPO

Outsourcing of knowledge intensive Outsourcing of standard business business process and activities process Value, time to market, scale, Cost is the primary driver flexibility are the primary drivers, then cost Knowledge creation process is not Processes are mostly standardized well defined Industry is evolving and clients are Industry is mature and outsourcing still learning components easily carved out Clients perceive risk of data security Most of the risk have been and IP leakage addressed by infrastructure, processes . Domain expertise (depth) more Bigger the better: economies of important than size scale is a competitive advantage Finding skilled talent is the biggest Managing attrition is the biggest Slide 8 challenge challenge © Evalueserve, 2008. All Rights Reserved - Privileged and Confidential

 The global market at Low-end outsourcing services have an expected CAGR of 26% by 2010.  In contrast, is poised for an expected CAGR of 46% by 2010.

Source : Evalueserve

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KPO Sector SWOT Analysis
Strengths Weaknesses  Large talented pool Immoral and unethical practices related to  Quality IT training handling of crucial data  Low labour costs  Rising wages  Success of BPOs The inability to uniformly develop and  Good knowledge of project managementprovide infrastructural requirements as real skills estate prices are rising in major cities.  Supportive government policies  Inadequate Intellectual Property Rights  Many new areas of specialization are being(IPR) protection regime in India covered making KPO sector spreading its Billing rates are higher as compared to wings billing rates in BPOs  Consideration to quality standards like ISO 900x and Six Sigma  Billing rates are lower as compared to billing rates in other countries Opportunities Threats  Increasing domain expertise  Non retention of talent  More areas of specialization can be Expected labour supply gap as jobs grow added to KPOs  Ample opportunities for SMEs faster than the workforce.

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Growth drivers of KPO sector
 Shortage of knowledge professionals in countries like USA, UK, etc.  Low wages labour  Well established IT services and BPO sector  Single vendor services  Talented workforce  Excellent project management skills  Highly qualified professionals  Proficiency in English  Supporting government policies

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Why Choose India ?
Basis on the Comparison of following factors in countries: India, Philippines, Russia, China, Canada, Ireland
 Labor Pool  Labor Cost  Government Polices  Infrastructure  Knowledge full / Expertise 

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India’s Competitive advantage vis-à-vis other nation

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Top 10 Indian Companies
SI. NO. COMPANY

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

GENPACT Evalueserve Ugam Solutions WNS Global Services 24/7 Customer ICICI OneSource EXL Service Copal Partners Pangea3 TechBooks

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India’s Market Trends
 The service sector accounted for 51% of India’s GDP in 2003  Estimates that the share of service sector is expected to rise to 57% in 2010.
Share of service Sector in india's GDP
57 58 56 Market Share (% ) 54 52 50 48 2003 Year 2010 51

Source : Evalueserve

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In 2003, USD 0.72 billion revenue was generated by the Indian KPO industry, contributing around 0.24% to the Indian service sector. This figure is expected to reach 1.78% by 2010.
Share of KPOs in the Indian Sector
12 12 10 Revenues (Billion $) 8 6 4 2 0 0.72 1.1 1.6 2.4 3.6

2003

2004

2005 Year

2006

2007

2010

Source : National Association of Software and Services Companies (NASSCOM) report

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India’s KPO Market Trends
 The share of Indian KPO sector was 56% of the global KPO sector in 2003.  By 2010, Indian KPO sector is expected to have 71% share of the global KPO sector

Share of Indian KPO sector in global KPO market
71 80 60 Market Share (%) 40 20 0 2003 Year 2010 56

Source : National Association of Software and Services Companies (NASSCOM) report

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KPO sector worldwide is expected to reach USD 17 billion by 2010. As estimated, the BPO exports will be $20 billion and KPO exports will be $12 billion by 2010.
Exports of Indian BPO and KPO sectors in 2010
20 20 15 Exports (Billion $) 10 5 0 BPO Year KPO 12

Source : National Association of Software and Services Companies (NASSCOM) report

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Future KPO Market Trends

Out of the $12 billion in KPO sector by 2010, the contribution of the 6 main sectors will be as shown above.

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Bottlenecks in Future Growth in India
 Expected dearth of domain expert professionals  High attrition rates  Talent retention  Data security and confidentiality  Rise in the investment in KPO infrastructure

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Conclusion
 Knowledge Processing Outsourcing is an emerging sector and is growing at a very rapid rate.  Many high- end areas of specialization that were earlier not considered for outsourcing are now being outsourced and are being handled by KPOs.  India has become a major KPO player in the world.  Indian economy, the education system, political stability, technology, communication skills and qualified workforce altogether make India an excellent location for KPOs.

“ KPO wave is here to stay and May Be The Next Boom Business”

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Thank You

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