Knowledge Professionals and the Indian KPO Market: KPO Billing Rates

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Besides the limited supply of skills, the cost-difference leverage is still one of the key drivers attracting countries such as the USA and the UK to consider India as a potential destination. The salary of a professional in India is half that of what his counterpart in the US earns. The low cost being a major advantage has resulted in lower billing rates in India compared to other countries.

Table 8 – Approximate Billing Rates

Source: www.sourcingmag.com

The labor cost advantage is not related only to wages but also includes tangible and intangible benefits to the employee. Moreover, the cost gap is further widened when the total costs are considered. Total costs include training, infrastructure (rent, power, maintenance, etc.), support functions such as HR, health benefits, supervision or senior management costs and database costs.

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 ( 9).

Salaries are on the upward trend. In the Indian context, KPO salaries can be 25–50 percent higher than those offered to the same domain experts (engineer, doctor, CA, lawyer, architect, biotechnologist, statistician, MBA, economist etc.) in conventional jobs (10).

It was further estimated that an average annual hike was around 14 percent and that this could rise to 30 percent in the case of higher-end knowledge services (11).

Though the cost gap narrows in some cases, it still remains a cost benefit. Over a five-year period from 2005 to 2010, the average cost differential will narrow down especially faster in the case of a high-end workforce equipped with advanced degrees such as PhDs.

Table 9 – Percentage Cost Difference between Salaries earned by professionals in India and the US or UK

Source: ‘Knowledge Services Market’, a report published by RocSearch, a UK-based research services company

Figure 3: Comparative Numbers of Management Professionals, Chartered Accountants and Engineers entering the KPO employment market in US and India (2005–2008)

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