KPO is a high-end business process outsourcing (BPO) that involves processes which demand advanced technical and analytical skills as well as judgement and decision making abilities. The scope of KPO functions is vast and includes areas like intellectual property, research activity in pharmaceuticals and biotechnology, data mining and a range of services encompassing scientific, technical, medical, financial and other fields. The boom in this sector is creating various opportunities in terms of employment generation, wealth creation and even real estate value.
The Indian Outsourcing Industry has witnessed tremendous growth in recent years. The National Association of Software and Service Companies (NASSCOM) have predicted that the Indian KPO industry will achieve phenomenal growth by 2015 accounting for about 70 % of the global KPO share. This industry has witnessed changes in terms of employing more intricate and niche domains fuelled by outsourcing more complex high end services to India.
Global firms have been outsourcing knowledge intensive services to India. However, now Indian firms have moved up the value chain and increased their portfolio of different verticals and domains to accommodate specialised services being outsourced by these global firms. According an ASSOCHAM (Associated Chambers of Commerce Industry of India) report, the popular service offerings of Indian firms include financial and equity research, intellectual property research, business and market research, medical and legal research and research reports.
KPO work is specialised and not scale driven like BPO. As a result, in recent years this industry has seen entry and proliferation of many small firms having high degree of specialisation. Minimal requirements pertaining to set up and infrastructure have encouraged businesses to enter KPO field, with freelancing becoming a norm.
Initially, KPOs were primarily set up in urban areas like Gurgaon, Banglore and Mumbai. However, companies are now eyeing tier-II cities on account of rising infrastructure costs and high attrition rates in urban areas. Besides, many state governments are now setting up state of the art IT/software parks to attract such companies.
In today’s competitive scenario, outsourcing firms have to differentiate themselves and provide specialised services to sustain in the competitive Indian market. As a result, a number of acquisitions and mergers have been seen in recent years. Such deals help the firms to acquire field specific knowledge as well as expand its customer base.
Pure BPO players are now trying to move up the value chain by providing specialised services on account of competition from the KPO firms. Also, large multinational firms are setting up captives in India as they are sceptical on issues of data security and classified information.
There is a rising demand of manpower in areas such as capital and financial markets, publishing industry, clinical trial management etc which require highly skilled professionals from medicine, company secretary services and accountancy and editing fields. Though India does not have a dearth of professionals having intellectual and analytical skills, there have been predictions of labour shortage in the outsourcing industry in India. There is a possibility that if India is unable to match the labour demands of the booming outsourcing industry, the clients might look for alternative destinations. Countries such as China, Philippines, Hungary, Russia and Poland are already vying for these lucrative outsourcing jobs by offering the same advantages of distance, location and cost as India.
The KPO industry in India has witnessed many changes over the years and it remains to be seen how Indian outsourcing firms are able to sustain themselves in the rapidly evolving global business scenarios.