Knowledge Professionals and the Indian KPO Market

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2.0 KNOWLEDGE PROCESS OUTSOURCING (KPO) IN INDIA

2.1 Demand and Supply Statistics of Professionals in India

KPO work requires knowledge expertise, technical and analytical, and a skilled workforce. The sectors that have potential within the KPO industry include data search, integration and management services, financial services, research and analytics, technology research, computer-aided simulation and engineering design, and professional services such as business research and legal services.

Some of the other factors fuelling growth in KPO:

• There is an increasing shortage of skilled and qualified knowledge professionals in developed economies such as US, UK and other countries in Western Europe, especially on knowledge-intensive high-skill sectors such as research and development in VLSI, engineering design, IT, financial risk management, etc.
• Savings are greater at the high end of the value chain in comparison to low-end per-job based operations; therefore the KPO market that constitutes high-end operations is more beneficial to offshoring buyers.
• Business models created by high-quality, specialized vendors and successful captives has led to better awareness of the KPO industry in the West and in India.

Figure 2: Number of Graduates Produced Annually in India

Source: ‘Knowledge Services Market’, a report published by RocSearch,

Despite the availability of a large number of qualified professionals in India, companies are finding it difficult to employ a skilled workforce, especially at the middle management level. Table 6 presents the percentage of employable candidates passing out of various technical streams.

Table 6 – Quantity vs. Skill / Employability

Source: ‘Knowledge Services Market’, a report published by RocSearch
* Top 16 B-Schools including the six IIMs (Indian Institutes of Management)
** Other Govt. approved B-Schools (All India Council of Technical Education)

The assumptions on which the figures of employable candidates are estimated are:
1. Between 10 and 15 percent of the students4 (such as engineers, MBAs, doctors and pharmaceutical science graduates, chartered accountants, lawyers, computer science graduates, graduates and postgraduates – generalists) are likely to be considered suitable for employment in a global company.
2. Out of the set of people considered suitable for employment, it is assumed that only about two out of every hundred with the right skills are likely to choose to work in the knowledge services market.
3. Two percent of the people employed in the public and private sectors are working in knowledge services outsourcing jobs. The high percentage takes care of the possibility of lateral movement from other industries.

Only China and Russia come close to India in terms of the number of qualified professionals available. In the next four to five years the demand for knowledge professionals from developing countries is going to increase tenfold. If the government, the companies and the educational institutions do not give attention to the supply gap in the KPO market, India’s ability to capitalize on the knowledge services boom will be constrained.

The Economics of Skill

The shortage of Indian knowledge professionals arises from low employability and competing demand from the domestic market as the economy grows. A report released by the Government of India emphasizes that the number of jobs is exceeding the available workforce: off-farm jobs rose by 2.5 percent a year between 1998 and 2005 whereas the labor force grew only by 2.0 percent5.

Nasscom (the apex association of software companies) estimates a shortage of 5, 00,000 knowledge service workers in the IT sector by 2010.

One of the many reasons for low employability could be attributed to the mismatch between industry requirements and academic curricula of most of the professional colleges. For instance, approximately 2000 MBA students who graduate from the Indian Institutes of Management and 10 other premier schools every year could be considered suitable for employment, while only half of the 84,000 graduates from the AICTE- approved Tier II business schools can be considered employable.6

2.2 KPO: Essential Skill Sets for Professionals

Table 7 – KPO: Essential Skill Sets to Increase Employability

Source: www.sourcingmag.com

As stated by Mr. Charles Amos, Head – HR, Marketics20, the level of knowledge and work experience of skilled professionals who service high-end processes makes them more stable and is one of the major strengths. The attrition rates are minimal in the KPO industry in comparison to other industries. One of the reasons includes the specialized nature of work, which only professionals with specific domain knowledge and experience can service.

However, in certain cases, knowledge professionals who are qualified to provide services do not possess the inclination to learn and grow in tandem with the dynamic nature of the KPO job. Additionally, the lack of training in business-related skills makes KPO workers with lesser work experience less likely to deliver high quality results. Unlike the BPO industry, which is process oriented, the KPO market demands professionals with decision making, problem solving and analytical skills.

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