Knowledge Professionals and the Indian KPO Market: Key Aspects for Outsourcing Operations

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A Snapshot

Source: Forrester Research Inc.

5.1 Key Aspects of Setting up KPO Operations in India

Investment in outsourcing operations has the advantages of low cost and availability of a skilled workforce but it also has risks that should be taken into consideration. The precautions or guidelines to be taken into account while setting up outsourcing operations (18):

i. Detailed Research – Investors should conduct an in-depth study into the company they are going to outsource their operations to, a study that contains information about the number of years of operation, strengths of the company, the current financial situation, past performance and history, including the efficiency of operations in the past.
ii. Quality of Services – In the case of KPO operations, it is imperative to conduct a detailed study into the quality of services provided by the company, the hiring process, quality standards and certifications (eg. whether they have ISO and CMM certification) adopted in order to provide an idea of how the service provider intends to deliver quality work consistently. Client references and recommendations are the best ways to identify the quality of the company’s service.
iii. Consider Overall Costs – With reference to costs, apart from obvious costs such as licensing and consultancy costs, other hidden costs such as maintenance, training, infrastructure and transition have to be considered and clarified before finalizing an agreement.
iv. Realistic Deliverables – Investors should ensure that targets promised by the service provider are realistic and achievable. A study should be conducted on a statistically viable target to serve as a benchmark to identify if providers are over-promising and, if they are, to find out how they propose to achieve such targets.
v. Data Privacy and Security – With numerous cases in the outsourcing industry to prove the criticality of data privacy, investors should only consider those companies that meet the requirements of data privacy, including infrastructure security (firewalls, access controls, data encryption, etc.) and human-resource related issues such as pre-recruitment background checks, non-disclosure agreements, etc.
vi. Business Continuity – The service provider should be able to offer business continuity and disaster mitigation plans in order to reduce business-related risks.
vii. Reliability – Through customer referrals, the reliability and honesty in financial dealings of the provider should be checked.
viii. Compliance with Statutory Laws – All aspects of business operations provided by the provider should conform to statutory laws of the place in which it is located.
ix. Conducive Work Culture – The company chosen should possess the kind of work culture and ethics that will facilitate smooth communication and management by the offshoring company.
x. Human Resource Management – As KPO jobs require knowledge professionals, people development processes with a global perspective should be implemented. A focus on development of professionals and employee care will translate to better quality, productivity, retention and success in the industry.
xi. Recruitment Processes – Recruiting the right people in a knowledge-intensive KPO market is essential to avoid quality issues that may hinder successful operations in the future due to hiring mistakes. The critical process of recruitment must be organized and quality standards of assessment and evaluation have to be adopted.
xii. Training – As the KPO industry is dynamic and demands up-to-date skills, it is important to train and develop skill sets such as functional skills, cross-cultural skills as well as managerial skills.
xiii. Retention and Managing Attrition – There are various practices and systems that have to be implemented to provide personal and professional growth to knowledge workers in order to reduce attrition.

5.2 Key Aspects of Hiring Skilled Personnel for KPO Activities

As with any other investment in outsourcing operations, there are aspects to be considered that are exclusive to KPO operations.

Some Best Practices to Help Avoid Hiring Mistakes

Indian Thought Leader, Mohinish Sinha, Associate Director and Head of HR Consulting at PwC India, outlined the following points that need to be considered:

• The employer and candidate need to clarify the job down to the last detail.
• The candidate should meet and spend some time with prospective peer group and seniors.
• The prospect should also find out how critical the job is, the person who did the job earlier, scope for growth and learning, how performance will be evaluated etc.
• Most hires leave on account of interpersonal problems with the team/supervisor, or because what was promised and what was delivered was not clear. Both sides need to explore and clarify their assumptions before they finalize the job agreement.

The costs of not doing the above-mentioned could be not just monetary but far worse – ill feeling and a bitter experience.

How to manage employees and develop programs to reduce attrition:

• Apart from providing incentives (monetary or non-monetary) and benefits, companies should also consider providing personal growth opportunities. This helps in raising the morale of the employee and leads to better productivity.
• The job offered should be an interesting task to avoid monotony and sustain the attention span of the employee
• The work must provide the employee with a sense of achievement, an opportunity to allow the employee to translate efforts into business gains.
• There should be scope for professional growth in the organization. Apart from personal growth, employees should be provided with opportunities to take more responsibility and prove their abilities.
• Programs should be developed to induce a positive work environment, such as constructive feedback sessions, team-building workshops, etc.

6. CONCLUSION

There will be huge demand for professionals in the KPO industry. There will also be outsourcing of operations in many more new verticals.

In order to capitalize on the KPO boom, aspects to be addressed are:

• Improvement of the education system and curriculum
• Standardization and organization of recruitment processes to hire the right person for the right job
• Provision of training facilities to develop skill sets of professionals to meet the ever- growing demand of the KPO industry
• Initiatives by the government to increase the value proposition of India as a preferred destination for foreign investment.

In other words, a large number of graduates are produced every year in India to support the demand for knowledge professionals by the KPO industry. Though a shortage is projected, initiatives by academic institutions, the industry and the government will help in avoiding a future deficit. The education or pedagogic system will have to be improved to meet quality standards of international levels. Development of knowledge zones on the lines of the Special Economic Zones (SEZs) may be a support system to improve quality. Also, if students chose their career path with due consideration, they would choose the field to which they are best suited. In addition to development of academic and domain knowledge, professionals must also take the initiative to improve on their soft skills.

In the KPO industry, currently, the main focus is on the estimated supply gap in knowledge professionals. Various solutions such as an industry–academia–government alliance and better HR practices, including the recruitment processes, are being considered.

Also, due to wage pressures and competition, knowledge professionals’ salaries are rising. Based on a study released by EvalueServe, the average annual salary is around $ 8,000 per annum in the Indian KPO sector and $ 6,000 per annum in the BPO segment. The revenues of the Indian service sector are expected to rise by 12 percent per annum to $ 675 billion in 2010 from $ 306 billion in 2003 (19). But in spite of the rising levels, the cost-difference high-quality leverage is still one of the key drivers attracting outsourcing companies to India.

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