KPO Industries

THE GROWTH OF KPO INDUSTRY
IN INDIA
Points to be discussed
Knowledge Process Outsourcing – Overview
Difference between KPOs and BPOs
KPO Sector SWOT Analysis
Growth drivers of KPO sector
Why Choose India
Top 10 Indian Companies
India’s KPO Market Trends
Bottlenecks in Future Growth
Conclusion
Knowledge Process Outsourcing (KPO)
Overview
 KPO is a form of outsourcing, in which knowledge-related and
information-related work is carried out by workers in a different
company or by a subsidiary of the same organization, which may be
in the same country or in an offshore location to save cost.
 KPO’s have evolved from BPO’s.
 KPO’s were introduced in India by McKinsey when it first set up a

knowledge center in India in 1987.
 But KPOs actually started coming up in India in 2000 when many

companies like OfficeTiger, GE, Gartner, etc opened their
research centers here.
 Some of the hot destinations for KPOs other than India are
Russia, China, Czech Republic, Ireland and Israel.
Slide 3
© Evalueserve, 2008. All Rights Reserved - Privileged and Confidential
Knowledge Process Outsourcing - Overview
K.P.O Highly Value

Added Process
Chain
KPO jobs are more challenging
as it needs process expertise.
KPO requiers domain

knowledge and business
expertise.
PEOPLE
In turn, requires analytical and

highly specialized skills.
Slide 4
Segments Associated With KPO
Slide 5
Current KPO Market Trends
Slide 6
Progression to KPO
1990’s 1998 2000

IT/ITES BPO KPO
 IT Services  Transaction  Business Research
 System Analysis processing  Investment Research
 Network Design  Selling  IP Research
 Sortware Insurance  Legal Process
Implementation polices Outsourcing
 System Integration  Technical  Data Analytics and
 R&D support Financial Analytics
 Report Network  Voice and Email
Management support
Slide 7
Difference between KPO and BPO
KPO BPO
Outsourcing of knowledge intensive Outsourcing of standard business

business process and activities process
Value, time to market, scale, Cost is the primary driver
flexibility are the primary drivers,
then cost
Knowledge creation process is not Processes are mostly standardized
well defined
Industry is evolving and clients are Industry is mature and outsourcing
still learning components easily carved out
Clients perceive risk of data security Most of the risk have been
and IP leakage addressed by infrastructure,
processes .
Domain expertise (depth) more Bigger the better: economies of
important than size scale is a competitive advantage
Finding skilled talent is the biggest Managing attrition is the biggest
challenge challenge Slide 8
 The global market at Low-end outsourcing services have an expected
CAGR of 26% by 2010.
 In contrast, is poised for an expected CAGR of 46% by 2010.
Source : Evalueserve
Slide 9
KPO Sector SWOT Analysis
Strengths Weaknesses
 Large talented pool Immoral and unethical practices related to
 Quality IT training handling of crucial data
 Low labour costs  Rising wages
 Success of BPOs The inability to uniformly develop and
 Good knowledge of project managementprovide infrastructural requirements as real
skills estate prices are rising in major cities.
 Supportive government policies  Inadequate Intellectual Property Rights
 Many new areas of specialization are being(IPR) protection regime in India
covered making KPO sector spreading its Billing rates are higher as compared to
wings billing rates in BPOs
 Consideration to quality standards like
ISO 900x and Six Sigma
 Billing rates are lower as compared to
billing rates in other countries
Opportunities Threats
 Increasing domain expertise  Non retention of talent
 More areas of specialization can be Expected labour supply gap as jobs grow
added to KPOs faster than the workforce.
 Ample opportunities for SMEs
Slide 10
Growth drivers of KPO sector
 Shortage of knowledge professionals in countries like USA,

UK, etc.
 Low wages labour
 Well established IT services and BPO sector
 Single vendor services
 Talented workforce
 Excellent project management skills
 Highly qualified professionals
 Proficiency in English
 Supporting government policies
Slide 11
Why Choose India ?
Basis on the Comparison of following factors in

countries:
India, Philippines, Russia, China, Canada, Ireland
 Labor Pool
 Labor Cost
 Government Polices
 Infrastructure
 Knowledge full / Expertise
Slide 12
India’s Competitive advantage vis-à-vis other
nation
Slide 13
Top 10 Indian Companies
SI. NO. COMPANY
1. GENPACT
2. Evalueserve
3. Ugam Solutions
4. WNS Global Services
5. 24/7 Customer
6. ICICI OneSource
7. EXL Service
8. Copal Partners
9. Pangea3
10. TechBooks
Slide 14
India’s Market Trends
 The service sector accounted for 51% of India’s GDP in 2003
 Estimates that the share of service sector is expected to rise to 57%
in 2010.
Share of service Sector in india's GDP
57
58
56
Market Share 54 51
(%) 52
50
48
2003 2010
Year
Source : Evalueserve
Slide 15
In 2003, USD 0.72 billion revenue was generated by the Indian KPO
industry, contributing around 0.24% to the Indian service sector.
This figure is expected to reach 1.78% by 2010.
Share of KPOs in the Indian Sector

12
12
10
8
Revenues
6 3.6
(Billion $)
4 2.4
1.1 1.6
0.72
2
0
2003 2004 2005 2006 2007 2010
Year
Source : National Association of Software and Services Companies (NASSCOM) report

Slide 16
India’s KPO Market Trends
 The share of Indian KPO sector was 56% of the global KPO sector in 2003.
 By 2010, Indian KPO sector is expected to have 71% share of the global KPO sector
Share of Indian KPO sector in global KPO market
71
80 56
60
Market
40
Share (%)
20
0
2003 2010
Year

Slide 17
KPO sector worldwide is expected to reach USD 17 billion by
2010.
As estimated, the BPO exports will be $20 billion and KPO
exports will be $12 billion by 2010.
Exports of Indian BPO and KPO sectors in 2010
20
20
12
15
Exports
10
(Billion $)
5
0
BPO KPO
Year

Slide 18
Future KPO Market Trends
Out of the $12 billion in KPO sector by 2010, the contribution of the 6 main sectors will be as shown
above.
Slide 19
Bottlenecks in Future Growth in India
 Expected dearth of domain expert professionals
 High attrition rates
 Talent retention
 Data security and confidentiality
 Rise in the investment in KPO infrastructure
Slide 20
Conclusion
 Knowledge Processing Outsourcing is an emerging sector and is
growing at a very rapid rate.
 Many high- end areas of specialization that were earlier not

considered for outsourcing are now being outsourced and are
being handled by KPOs.
 India has become a major KPO player in the world.
 Indian economy, the education system, political stability,

technology, communication skills and qualified workforce
altogether make India an excellent location for KPOs.
“ KPO wave is here to stay and May Be The Next Boom Business”
Slide 21
Thank You
Thank You
All !!

KPO Industries

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KPO Industries

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THE GROWTH OF KPO INDUSTRY

Difference between KPOs and BPOs

KPO Sector SWOT Analysis

Growth drivers of KPO sector

Why Choose India

Top 10 Indian Companies

India’s KPO Market Trends

Bottlenecks in Future Growth

 KPO’s have evolved from BPO’s.

 KPO’s were introduced in India by McKinsey when it first set up a

 But KPOs actually started coming up in India in 2000 when many

K.P.O Highly Value

KPO requiers domain

In turn, requires analytical and

1990’s 1998 2000

Outsourcing of knowledge intensive Outsourcing of standard business

 Shortage of knowledge professionals in countries like USA,

Basis on the Comparison of following factors in

 Knowledge full / Expertise

Share of service Sector in india's GDP

Share of KPOs in the Indian Sector

Source : National Association of Software and Services Companies (NASSCOM) report

Share of Indian KPO sector in global KPO market

Source : National Association of Software and Services Companies (NASSCOM) report

Source : National Association of Software and Services Companies (NASSCOM) report

 Expected dearth of domain expert professionals

 High attrition rates

 Data security and confidentiality

 Rise in the investment in KPO infrastructure

 Many high- end areas of specialization that were earlier not

 India has become a major KPO player in the world.

 Indian economy, the education system, political stability,

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