KNOWLEDGE PROCESS

OUTSOURCING – ITS
SCOPE IN INDIA

Manish Kumar Singh

B.Tech 3rd year Electrical
 Offshoring
Purchasing services from other countries
Derived from outsourcing
Subdivided categories –
– BPO
– KPO
 BPO & KPO
Higher business value
for outsourcer
BPO – “standardized”
process
KPO - Create value by
business expertise
BPO - Net income
generated greater by
– $8 bn
Knowledge of English
only not sufficient
 Reason for this Trend
For the Period of 2003-2010(USA)

GDP growth – 3.2%

Additional Labor Requirement - 13.2mn
Actual workforce increase - 7.6mn
(unemployment rate – 5.2%)
Labor shortfall – 5.6mn
Immigration not fulfilling the gap
Offshoring trend (USA)
 Reasons for Offshoring

Estimates for US Economy (2003-2010)

Increase in wages
US companies become uncompetitive
US national output declines – 2.62%
Decline in growth rate – 0.6%
Rise in unemployment
 Economic Drivers
Cost Savings
Operational efficiency and improve quality
Flexibility and greater speed
Larger talent pool required
Need to gain new markets
Need for product or service localization
 Future for KPO in India
(Estimates)
Global KPO market – $17bn by 2010
Net CAGR – 46%
Indian KPO share – $12bn by 2010
India’s market share – 70%
Employment – 2.5 lac (by 2010)
 Hotspots for KPO
R&D
Data Analytics
Pharmaceutical
Biotechnology
Healthcare
Legal Support
Information Technology
Intellectual Property Research
 Legal Support
Cost of Indian lawyer – 10%of US counterpart
Associate lawyer (US) cost
– 1st year – $225 per hour
– 8th year – $450 per hour
US firms outsource - $5 bn (by 2006) in litigation
support
Revenue generated by para-legal services -
$300 mn
Many US law firms opening back offices India
 Intellectual Property Rights
Patent writing in US – $10k-15k
Patent application preliminary draft
(offshore) – modified later
Cost saving in terms of patent application-
60% for end client
Other IP services too at low cost
•IP overlap
•IP landscaping of technology domains
•IP licensing, IP docketing
•IP commercialization
•Trademark searching and filing services
 Pharmaceutical
Globally Indian Pharma industry ranking – 8th
(volume) and 13th (value)
World class research facilities
Custom drug synthesis cost savings – 30-50%w.r.t.
global prices
Global R&D cost - $60 bn ,in Indian prices - $14.8bn
Clinical trials cost – $25 mn(India),$250-
300mn(global)
Contract research cost - 40-60% of global prices
Clinical trial industry to grow 20%p.a.to $ 1.5 bn by
2010
 Biotechnology
Different climatic zones
Varied natural resources
Excellent network of laboratories, base
industries, clinical trial
English speaking technocrats
High reputation in international market due to
recent Genetic discovery
Expected earning - $5 bn (by 2010)
Employment generation, industrial growth, wealth
creation
 Healthcare – Opportunities
Medical state (UK)
– Professionals leaving –
9% annually
– Aging population
– Long waiting lists
Middle east •US
– Strict US visa regulation •70% people prefer natural
– High prices treatment
•USD 25 bn spent for same
Other countries-Bangladesh,
Sri Lanka, Malaysia
2 mn PIO with medical bills –
$7.2 bn
Healthcare – Advantage India
Combines both Eastern and Western thereapies
Traditional medicines – Ayurveda, Yoga, Siddha
Cost advantage
Reputation – Indian Medical Diaspora
Multi-organ transplant for patients from 55
countries
60,000 cardiac surgeries done per year
 Healthcare – Estimates
Investment required – USD 22-31 bn (next 10
years)
By 2012
– Largest in value
– 2nd largest employer
– Contribution to GDP – 7-8%(by 2012)
– Employment generated – 9 mn
 IT
Friendly Government IT
export and STP policies
Low salary – USD 5,400 –
9,000
Proficiency in English
Reputation
Large and specialized talent
pool
Rate of increase in no. –
12% CAGR
No. of employees by 2009
– Total of 1.156 mn
– Exporting software and
services – 809,000
 Challenges
Apprehension about quality
Higher infrastructure investment
Inadequate domain expertise
No data protection act
Professionals with required specializations less
thus they have to be trained.
Training expensive
 Problems Side of KPO
Perceived as low grade job
Difficulty in retaining qualified professionals
Job insecurity, uncertainty
Concern over stagnation
24x7 workload
Rise in salaries – 14%(CAGR)
Language barrier with non-English speaking
countries
Shorter duration contracts
 Competition
China
– Huge Diaspora
– Better infrastructure
– Strong Economy
– Low Wages
– Language similarity with Korea and Japan
Russia
– Large no. of Doctors and Engineers
– Proximity and cultural compatibility
Other nations – Ireland, Czech republic
 Indian Edge
Large pool of talent
Majority of population still young
Trust and confidence of US companies
Lower costs
Established judicial system
Huge and affluent Diaspora
 Conclusion
Favorable for both countries
Huge income & employment generator
Infrastructure investment
Thank you for being such a patient audience
The Floor is Open for any Questions
Present Offshoring Trend (UK)
 Data Mining and Analytics
Companies savings on
analytics and inventory
service management –
60-70%
PhD cost differential –
USD 60K to 80K
Some of the supply-chain
management solutions
• Demand and channel planning,
• Manufacturing scheduling,
• Transport planning