NEW DELHI: It's the sector that holds most promise in the outsourcing pie. And now a report predicts it's poised for big times ahead. The report says the knowledge process outsourcing industry (KPO) will be worth $16.7 billion by 2010-11. With an annual growth rate of 39% for the next four years, it will grow even faster than the BPO sector globally. What's more, while in 2006-07 KPOs employed 106,000 professionals worldwide, their numbers are expected to grow and touch 350,000 by 2010-11.
But the real good news is for India. India will be the future hub of KPO sector and competitors China, Philippines, Russia will be spokes of the industry. These predictions are made by Alok Aggarwal, chairman Evalueserve in his yet to be released report, 'India's Knowledge Process Outsourcing Sector: Origin, Current State, and Future Direction'.
"There is a substantial momentum in the growth of KPO industry in India and although attrition is becoming quite poor, there are still enough new graduates that are joining this industry who can keep this momentum going," says Aggarwal.
Its earnings went up from $1.2 billion in 2003-04 to $4.4 billion in 2006-07 that is an annual growth of 54% worldwide. Similarly, the number of employees too grew from 34,000 in 2003-4 to 106,000 in 2006-07. In comparison, BPO revenues moved from $7.7 billion in 2003-04 to $15.8 billion in 2006-07, that is an annual growth rate of 27%. In the next four years, it's expected to grow at 26% annually and generate $39.8 billion.
In India, KPOs employed around 9,000 professionals in 2000-01. By 2006-07 their numbers had scaled up to 75,400 generating $3.05 billion.
Aggarwal says, "KPO growth was triggered in 2004 when the issues like attrition, health in the call-centre industry in India became evident. In fact, KPO growth too can be hindered significantly by attrition, and it may come down from a projected revenue of $11.2 billion in 2010-11 to $9.9 billion or even lower if attrition continues to be a big problem. "As for competitors, probably the Philippines would be the closest followed by China," he added.
KPO is likely to be driven by factors like breadth and depth of coverage, domain expertise, location advantage, sales and marketing capabilities etc. Therefore, it is quite likely that firms both with own captives and those using third party vendors may use a 'hub and spoke' model where a provider in India may constitute 'centre' whereas other units in the world may provide appropriate 'spokes.'
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