India Report: Knowledge Professionals and the Indian KPO Market

SUMMARY

According to recent estimates by GlobalSourcingNOW, the global Knowledge Process Outsourcing (KPO) market is estimated to be US $17 billion by 2010. India is expected to hold seventy percent of the total market share.

This report analyses the capability of the Indian market to supply skilled professionals to meet the future demand of the Knowledge Process Outsourcing (KPO) industry.

The report is divided into three sections. The first section focuses on academia and provides a
perspective of the future supply of skilled workers.

The number of professionals added to the labor force annually in India is the highest in the world. According to the All India Council for Technical Education (AICTE), the apex body regulating technical education, India possesses an existing talent pool of around 100 million and annually adds to that over 3 million graduates and professional degree and diploma holders. But the number of people with the right skills is limited. In order to address the issue of this shortage, initiatives have been taken by the industry, academic institutions and the government.

The second section deals with the KPO industry. Various aspects pertaining to the field of knowledge professionals such as the demand and supply statistics, HR practices, tests and benchmarks, certifications and regional trends are discussed.

According to the Confederation of Indian Industries (CII), areas with significant potential for KPO include pharmaceuticals, biotechnology, technology, legal services, intellectual property, research and design, and the development of automotive and aerospace industries. 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. HR practices have to be organized to provide quality knowledge professionals to meet the demands of the KPO industry.

The third section provides guidelines, tips and precautions to be considered by investors planning to outsource operations or invest in service providers in India. It will help the investor build a strategy plan related to the location, the costs and the human resource requirements and the hiring process.

Investing in outsourcing operations in India has the advantages of low cost and the availability of a skilled workforce but it also involves risks that should be taken into consideration. Basic aspects such as investment in internal preparation, understanding the market before entering it, managing expectations, selecting vendors who can accommodate business needs and maturity level should be considered.

Although the cost gap narrows in some cases, it still remains a cost benefit to foreign investors looking at India as an option. Over a five-year period from 2005 to 2010, the average cost differential is expected to narrow down further, being especially faster in the case of a high-end workforce equipped with advanced degrees such as PhDs.

Bangalore, Pune, Kolkata, Hyderabad, Chennai, Mumbai and The National Capital Region (NCR) of Delhi have been attractive destinations for investment so far, but other Tier II cities, such as Mysore, Thiruvananthapuram, Kochi, Ahmedabad, Chandigarh and Jaipur, are catching up and gaining preference.

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