Talent Pool – With a large number of students graduating every year in India, a significant percentage are suitable as knowledge workers. In comparison to China, six times more people go to universities in India.
Lower Wages – In comparison to salary levels paid in other countries, India has an advantage because of its low cost-high quality scalability model.
Availability of Highly Qualified Personnel – India possesses the world’s largest number of scientific and technological personnel after USA.
Favorable Government Policies – The Indian government has recognized the potential of knowledge processes and has taken measures towards liberalization and deregulation. Recent reforms have reduced licensing requirements, made foreign technology accessible, removed restrictions on investment and made the process of investment much easier.
Indian Education System – The education system in India promotes higher education that encourages students to specialize in subjects and courses that will have a demand in the KPO industry globally.
Weaknesses
Low Employability – Though India produces a large number of graduates, only a small percentage of them are found suitable for knowledge-oriented projects.
Poor Education System and Curriculum – Though the education system has promoted higher education, the current curriculum needs to be revised and developed to enable scope for applicability by students. Applying theoretical knowledge in practical situations is one of the ways in which students can hone their skills to match global standards.
Increase in Attrition Levels – With the increase in competition and difference in salary levels, the attrition rate in the industry is rising. Though the KPO industry may not face attrition at as high a level as the BPO industry, it is nevertheless an issue that has to be addressed urgently.
Opportunities
Market Size – According to Evalueserve, India will dominate the KPO sector by 2010, with a market size of 71 percent of the projected $17 billion KPO market. It will grow by 45 percent per annum — from $1.29 billion in fiscal 2003 to $17 billion by 2010.
Opportunity Areas – Some of the KPO services that can be outsourced to India are Research and Development, Business and Technical Analysis, Learning Solutions, Animation and Design, Business and Market Research, Pharmaceuticals and Biotechnology, Medical Services, Writing and Content Development, Legal Services, Intellectual Property (IP) Research, Data Analytics, Network Management and Training and Consultancy.
A comparison of opportunities in the global KPO market of outsourcing operations between 2003 and potential areas in 2010 is provided below. It is an estimate of the market size of some of the high-end processes over the next seven years.
Table 11 – Potential KPO Opportunity Areas
Key Sector
FY 2003
FY 2010
Cumulative Annual Growth Rate
Equity, Financial, Insurance Research
0
0.40
N/A
Data Search, Integration and Management
0.30
5
50 percent
Research and Information Services in HR
0
0.20
N/A
Market Research and Competitive Intelligence
0.01
0.40
70 percent
Engineering and Design
0.40
2
29 percent
Animation and Simulation Services
0.10
1.4
46 percent
Paralegal Content and Services
0
0.3
N/A
Medical Content and Services
0
0.3
N/A
Remote Education and Publishing
0
2
N/A
Biotech and Pharmaceuticals (CRO, lead optimization, and manufacturing processes)
0.28
3
40 percent
Research and Development
0.2
2
39 percent
Total (US $ Billion)
1.29
17
0.46
Source: www.sourcingmag.com
Threats
Short Supply of Skilled Workers – One of the major threats in the KPO industry is the shortage of skilled professionals. Based on the rising demand and the supply of Indian graduates, a mismatch is predicted. But with initiatives taken by the government, industry and educational institutions, this projected deficit can be avoided.
Competing Demand of Domestic Industry – The pressure for the supply of knowledge professionals is rising due to the demand not only from other countries but also the domestic demand from Indian companies which are currently able to match standards of global MNCs.
Competitor Countries – Apart from China there are other countries such as Russia and Philippines that are competing with India in the KPO industry. For instance, Russia claims to be a good destination for healthcare and technology-related KPOs, while Philippines has established itself as a successful animation outsourcing destination ( 16).
Increase in Salary Levels – With high demand and increased competition, salary levels in the KPO and outsourcing industry are rising rapidly. The rate at which salaries are rising may reach a level at which the leverage India possesses of being a low-cost destination may be lost.
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