Indian Knowledge Process Outsourcing Market-Slowdown or resource optimization

Indian knowledge process outsourcing (KPO) market is worth US$4 billion, with year-on-year growth of 15% in 2008. India contributed 70% of Global KPO marketspace (2008). On the other hand, United States is the biggest contributor of knowledge centric processes to India, accounting 60-70% of total regional revenue mix (2007-2008). Global KPO market is stipulated to reach US$17 billion, with CAGR of 72.6% (2008-2010). India will be contributing 70.5% of global KPO marketspace in 2010.

India is largest KPO destination across the globe, with strong competitive pressures from Russia, China, Ireland, Israel and Philippines on cost and resource availability structures. Although India has higher cost structures as compared to closest peers such as Philippines and Russia (+22%), it has strong resource portfolio (Annual figures for 2008-business graduates: 95,000 and engineering graduates: 0.45 million).

The global recession, downturn of US and UK based financial institutions has indirectly impacted the Indian KPO marketspace. The indirect impact has been as follows:

Indicators Rationale

Laying off employees Lower business volumes from financial institutions across Untied States

Reducing hiring Majority of advanced economies facing credit crunch thus holding off KPO operations for liquid cash flows

Cutting back on incentives Largest KPO vendors saw reduction in net margins on short-term basis

Increasing work loads Optimisation of human capital and staff cost structure



The above short-term KPI provides substantial empirical evidence about declining KPO business measures by stakeholders across India and worldwide due to credit crunch and economic downturn. This is mainly due to largest outsourcing of Information technology enabled services (ITEs) as part of KPO marketspace to India in past 2-3 years (2005-2008). The economic recession scenario will be compensated by improved business opportunity for KPO vendors in engineering services, business research and analytics, legal research, clinical research, publishing and market research domains on long-term basis. The massive resource pool of engineers and management graduates will be the lucrative indicator for advanced economies based business cycles to improve Indian KPO market outlook in 2009 and 2010.

Bottom line: Although the cost structures for India are slightly higher than Russia and Philippines for KPO business environment the vast resource pool will provide moderate to growth rates in economic recession (2009-2010).The downturn of ITEs outsourcing will be offset by higher opportunities for engineering services, business research and analytics, legal research, clinical research, publishing and market research segments. In other words, Indian KPO marketspace is moving from cost based advantage to resource optimization era in economic downturn and global recession. Finally, KPO is here to stay and provide competitive advantages to nations leveraging knowledge base such as India, Philippines and Russia.



Share tips expert

INTRADAY TRADING TIPS || INDIAN STOCK MARKET TIPS ||

INDIAN SHARE MARKET TIPS