A PROJECT REPORT ONBPO & KPO SECTOR IN INDIA SUBMITTED TO: - SUBMITTED BY:- ACKNOLEDGEMENT In the preparation of this report, which is the part of the class presentations, We have put in substantial effort and at the same time We found it pleasurable doing the Case Study. We consider ourselves lucky enough to get the help of many people during the project. We take this opportunity to express my sincere gratitude to professor for social marketing for providing us the opportunity and for his constant help and guidance without which this project would have not reached this stage. Lastly, we would like to pay my thanks to all our colleagues and friends who have contributed to this work. Their constant motivation and help is a great source of inspiration. 18. 4. 3. 14. 23. 25. 21. 20. 16. No 1. 11. 2. 13. 12. 17. 8. 10. 9. 5. 6. 7.INDEX Sr. 24. CONTENTS BPO Overview What is BPO BPO in India The growth of strategic outsourcing Contribution of BPO to national economy Expanding the domestic market India rules the BPO roost Threats to the BPO sector M&A in BPO sector BPO: SWOT Analysis Conclusion for BPO sector Dawn of BPO Graduating to KPO KPO: Triggering the next bull ride in Indian Economy What is KPO? Scope and future of KPO KPO: Overview Benefits of KPO KPO: Skills defined What KPO can deliver to you? KPO in India India: Preferred destination for KPO Classification of KPO by segment KPO: SWOT Analysis . 15. 22. 19. India has the potential to become a world leader in the sector. OVERVIEW The Business Process Outsourcing (BPO)sector which includes back office companies and Customer Contact Centers. The most common examples of BPO are call centers. BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in the marketplace. BPO is a part of the outsourcing industry. Knowledge process outsourcing and legal process outsourcing are some of the subsets of business process outsourcing. holds enormous promise for the Indian economy. and the people to operate the service. The future growth of the sector is dependent on being globally competitive. and BPO that is contracted within the company's own country is sometimes called offshore outsourcing. accounting and payroll outsourcing. It is dependent on information technology. as outsourcers are raising the bar on a continuous basis. hence it is also referred to as Information Technology Enabled Services or ITES. usually via web browser to the customer. which includes customer-related services such as marketing or tech support. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing. BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. 28. 31. 29 30. Uniquely positioned. and front office outsourcing.26. High end Services outsourced to Indian KPO sector Challenges in KPO Extending the role of govt. the process management. Usually. to a third-party service provider. BPO is often divided into two categories: back office outsourcing. BPO includes the software. while a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software. QAI attempts to facilitate this potential by providing consulting and training services for enabling Operational . which includes internal business functions such as billing or purchasing. such as payroll. as facilitator KPO vs BPO Difference between BPO &KPO Conclusion: KPO vs BPO BPO (BUSINESS PROCESS OUTSOURCING) Business Process Outsourcing (BPO) is the contracting of a specific business task. Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. human resources. 27. BPO is also referred to as ITES -. . In the early days. And in the process ensure growth in revenues and profits.to do the work. Dominant outsourcing service providers in the BPO fields (some of which also dominate the IT outsourcing business) include US companies IBM. Wipro and Infosys. These outsourcing deals frequently involve multi-year contracts that can run into hundreds of millions of dollars. call center and customer service activities and accounting and payroll. the people performing the work internally for the client firm are transferred and become employees for the service provider. Then it grew to include employee benefits management. BPO usually consisted of outsourcing processes such as payroll. such as application management and application development. BPO organizations today have to focus on:• • • • Managing service levels efficiently. Frequently. as well as European and Asian companies Capgemini. and Hewitt Associates. Accenture. The ability to manage human resources and maintain quality. Now it encompasses a number of functions that are considered "non-core" to the primary business strategy. which focuses on hiring a third-party company or service provider to do IT-related activities.excellence. IT "enables" these services to be performed. Now it is common for organizations to outsource financial and administration (F&A) processes. Reducing costs of operations. Genpact. Increasing quality of services delivered.hiring a company based in another country -. Today. data center operations. India is a popular location for BPO activities. with an ability to meet ever-increasing customer expectations are the expected growth levers. Since most business processes include some form of automation. TCS.information technology-enabled services. BPO is distinct from information technology (IT) outsourcing. Often. human resources (HR) functions. Many of these BPO efforts involve offshoring -. technology is no longer the key differentiator. WHAT IS BUSINESS PROCESS OUTSOURCING (BPO)? BPO is the process of hiring another company to handle business activities for you. or testing and quality assurance. said that nearly 90 percent companies from 32 countries would either maintain or increase their existing outsourcing levels. KPMG. customers were asking the age old question. 2002. CONTRIBUTION OF BPO TO THE NATIONAL ECONOMY As per the NASSCOM-McKinsey Report. The BPO sector is expected to provide employment to 1. which was launched at the event. BPO is likely to contribute up to 3 per cent to India's gross domestic product (GDP). Thus. THE GROWTH OF STRATEGIC OUTSOURCING It emerged at the conclave that outsourcing would continue to increase over the next few years. Speakers and industry CEOs participating in panel discussions at the event also raised the issue about how outsourcing was evolving from a pure cost play to a strategic management tool and that Indian BPOs needed to focus on specific industry verticals with specific processes and demonstrate expertise in these areas. The current economic climate has encouraged the latter trend as the organizations continue to look for more innovative ways to improve efficiency and cut costs in order to survive the turbulent marketplace. European organizations have increasingly been focusing on what they identify as their core competencies and have been looking to reduce costs while maintaining high levels of quality for non-core activities and processes.1 million people by 2008 as per a report by the NASSCOM . the revenue from BPO will reach $24 billion by 2008 and the IT-enabled services (ITES) sector will contribute 37 per cent to the total IT software and services export market. to identify an acceptable third party service provider who will handle the processing work. “What Next. one to centralise the non-core processes into an in-house shared service functions to derive benefits of centralization through an in-house process or through a wholly owned subsidiary and two. A special study conducted by consulting firm. outsourcing of business processes has been gaining popularity driven by the fact that US firms have been enjoying much success from adopting this business strategy.” And Indian companies had to take the specialization route to answer this query. two broad approaches had developed. To this end.BPO IN INDIA Over the last few years. Not content with labor arbitrage cost savings. there are certain grass-root level setbacks too. BPO services in India initially started with email and voice only customer support services that later led to the mushrooming of numerous call center hubs across the length and breadth of the country. data entry and management services. INDIA RULES THE BPO ROOST The late 90’s witnessed a surge in the services sector of the Indian economy with numerous BPO centers for global conglomerates emerging in all the metros. the Government could play a role in expanding the domestic market. BPO put India on the world map and identified that it was a force to reckon with in the post-globalization world. This constituted a major chunk of the global pie of BPO revenues. insurance and tax processing.EXPANDING THE DOMESTIC MARKET According to the PM. In government. THREATS TO THE BPO SECTOR Despite the boom and support that BPO sector has fetched. The Indian BPO industry was making waves and was amassing revenues to the tune of $4 billion by 2004-05. These setbacks are strongly propagated to be threats resulting into backlash to the BPO activity in India. These are as under:- . claims processing. software and engineering services and other similar outsource-able functions. The dawn of the new millennium signaled the expansion of the bandwagon of BPO services that were outsourced to India by foreign companies. The Indian BPO industry saw an increased demand for services including healthcare – medical billing and coding. “We are working to make our economy a more knowledge based one.” he added. we are taking steps to e-enable government systems. Though manufacturing is yet to evolve as India’s forte. There were huge opportunities for this waiting to be tapped in almost all major sectors. Every sector of India’s economy needed to be more e-enabled. This has expanded the domestic market for IT and IT-enabled services. the success of the services sector more or less balanced the void created in the Indian economy by the lack of adequate manufacturing activity. While this created employment opportunities for numerous graduates and part time job seekers. there was a progressive transition of these call centers into more professional outsource service centers offering specialized high end services to overseas clients. India was reckoned as the preferred outsourcing location by global majors that evinced the fact that India had taken a definite lead over its counterparts to make the most of this BPO boom. From technical customer support to bill handling to medical transcription services to banking back-end operations to insurance services. Many government processes are being re-engineered and outsourced. Several large e-governance initiatives launched by the government under the National E-Governance Plan are expected to provide sustained growth in domestic demand for IT services over the next few years. including agriculture. in the US. Maryland. recently there were about 200 Indian companies offering BPO and related services looking for buyers. has not been taken too well in developed countries from where jobs are coming to India. low growth due to industry maturity and decentralized nature of facilities management are the main deterrents to the outsourcing in the facility & operations management sector. # If all above is not enough. three of the country's biggest trade unions have come together to fight the loss of jobs to India. As per the NASSCOM report. and the kind of gestation periods to be expected before profits can start flowing in consistently.# Lack of maturity in service line. # Discretionary cuts in budgets. BPO operations in India that belong to multinationals are also changing hands. increasing competition among e-logistics providers and management resistance are the main deterrents to the outsourcing in the logistics sector. # Some companies which jumped BPO market in India are now looking to sell their assets being unable to scale operations up to the required level. which appears to be a normal setback of BPO at the outset. As a result. Washington and Missouri that sought to ban the transfer of state data processing contracts to developing nations. and the failed enterprises have to either close down or get acquired. In the UK. New Jersey. . # Privacy concerns and technical nature of subject matter are the main deterrents to the outsourcing of legal services. many facilities that were set up are lying vacant. as they have neither funds nor clients. MERGERS AND ACQUISITIONS IN THE BPO SECTOR M&A in the BPO sector in India are not confined to Indian companies alone. bills have been tabled in five states namely. a New York-based private equity investor. Recently. the companies which are outsourcing non-core processes from third party service providers are literally placing their fate in the hands of another company. WNS was set up in 1996 as a captive back-office for BA. # Companies rush into BPO market without understanding the kind of operational and marketing issues they would have to cope with. WNS is now positioned as an independent third-party services provider. Connecticut. Last year British Airways PLC (BA) divested about 70 percent of the equity in WNS to Warburg Pincus. but still gets about 35 percent of its revenues from BA. # The rapid growth of India's ITES-BPO industry. Trans Works Information Services Pvt. linguistic capabilities and work ethics. SWOT Analysis for BPO Services In India Comparing India with other BPO Destinations (Why India?) The abundant skilled manpower has made India a target destination for multinationals to back end their operations in India.In India. Canada etc. In specific BPO categories. Also. Indian centers have achieved higher productivity levels-for example. including a $160 million order for setting up a BPO operation for BT in India. to their current customers. Philippines. a large Mumbai based business conglomerate. Customer Asset. Australia.. M&A in BPO sector are proceeding on two fronts. the number of transactions per hour for back office processing. India ranks high in areas such as qualifications. For example Wipro. a CRM (customer relationship management) services company in Delhi a few months back. HCL Technologies acquired over a year ago a 90 percent stake in the Apollo Contact Center in Belfast of BT Group. Ireland. a Bangalore based BPO company. capabilities. . Key buyers of BPO companies in India are software services companies which want to position themselves as vendors of a broad portfolio of services. quality of work. including BPO. Ltd. was acquired recently by the Aditya Birla Group. Indian companies have unique capabilities and systems to set. was acquired a year back by ICICI OneSource. The deal gave HCL a beachhead in the European market. Customer Asset had about 750 employees and operated a 350 seat call center in Bangalore. and helped it bag business from the London-based BT. than their Western counterparts. a Mumbai based BPO company. measure and monitor quality targets. other Indian BPO companies are acquiring operations both in India and abroad. a Bangalore-based software and services company. India is able to offer a 24x7 service and reduction in turnaround times by leveraging time zone differences. Even as some Indian BPO companies are getting acquired. acquired Spectramind eServices. and thus is ahead of competitors such as China. Business process experience 7. English proficiency 3.Government Support 4.Process quality focus 7.Fear/Uncertainty from Pakistan 9. STRENGTHS 1.Entrepreneurship 10.Leverage expertise for higher-value education 6. Leverage relationships in West to access APAC/Middle East markets 18.Positioning & Brand management 2. Many of these engineers are employed with call centers for troubleshooting and providing technical support at salaries that are dramatically lower compared to the pay scales in the US.Infrastructure 3.800 in the US.Skilled workforce 8.Sales & marketing 5.Reasonable technical innovations 11.BPO & Call center offerings 15.Legal system .Distance from US 8. Solid history in software development.Reverse brain drain 12. About 100.Existing long term relationships 13.Expertise in new technologies 9.India's unique geographic positioning makes this possible.Cultural differences 4.Strong tertiary education 6.Creation of global brands 14.000 engineers graduate from India every year. The average monthly salary in India is $400-700 compared to $2.Indian domestic-market growth WEAKNESS 1.Cost advantage 5.Chinese domestic & export market 17.700-2. 2. Many state governments in India are offering incentives and infrastructure to set up IT enabled services.Expansion of existing relationships 16. 10. Newspaper and magazine articles and analysts' briefings throughout the globe are reporting the projected strong growth of the BPO market in India. when it comes to ITES-BPO tier.Sometime blinding nationalism 17. 1 BPO destination in the Asia-Pacific overwhelming all the so called odds.Over-promise / Under-deliver 13. The origin of the outsourcing business model is a culmination to this effort. Russia. Malaysia. Eastern European countries and a few Latin American countries were identified as ideal targets for outsourcing locations by more developed economies. China. India.Internal competition for resources 12. Companies identified outsourcing a part of their business functions to cheaper locations overseas that have an abundance of skilled labor and necessary infrastructure. India is poised to become a No. . CONCLUSION As per the estimates. The Philippines.Regional geopolitical uncertainty 14Rising labor costs 15. how does it add new hue to various professions involved in this paparazzi to make the BPO a fertile business strategy DAWN OF BPO The sustenance and success of any business is determined by its cost competitiveness and time-tomarket window.77. and further. let us keep our fingures crossed and see that how does the BPO strategy instill perfection into the Indian corporates to help them achieve efficiency in their core businesses and reduce costs related to the non-core business activities.Government blocking reform/deals 18. skilled and talented unemployed youth became the most sought after destination for business process outsourcing during the mid and late 90’s when the outsourcing industry was gaining pace globally. It also resulted in a faster turn around time as the outsourcing arrangement resulted in a round-the-clock.Corruption/piracy/trust 19.Competition from other countries 16. with a current base of 96. 24/7 business model. Particularly.000 seats over the next 12 months to become the biggest BPO hub in the region. Thus. India with its wealth of English speaking.Poor globalization skills 11.Political & religious instability –war OPPORTUNITY 1. Companies across the world are constantly striving to devise business models that will enhance the efficiency of these two critical parameters.000 call centre seats. India is supposed to grow by 85 per cent to reach a capacity of 1. aided in significantly reducing their operational expenses and in improving their return on investments. The emergence of numerous R&D outsourced centers. Knowledge process outsourcing as the name indicates is the outsourcing of specialized services that warrant the expertise of highly skilled persons. medical. legal. KPO requires the services of employees with qualification and experience in that particular area. The continuing boom in the Indian BPO sector is a promising bellwether to what lies ahead for the KPO sector. Unlike BPOs that could employ people with a basic education base and good English speaking skills. are expected to grow at a CAGR of over 45 percent during the same period. which are currently in a nascent stage. KPO – TRIGGERING THE NEXT BULL RIDE IN THE INDIAN ECONOMY! Numerous studies on the global outsourcing industry indicate that while BPOs shall enjoy a cumulative annual growth rate (CAGR) of around 25 percent in the next 4-5 years. Considered to be the next tsunami of outsourcing services. Research also indicates that the global KPO industry is expected to be worth over $15 billion by 2009. It also portends the growth in infrastructure and increase in FDI that the country will enjoy in the coming years. market research and consulting services. countries across the globe were preparing themselves to ride the KPO tide. business research and consulting firms. firms offering legal services to overseas attorneys and clients and data analytics centers all indicate the propitious growth of the KPO sector in India in the ensuing years. India being no exception.GRADUATING TO KPO While the BPO industry in India was flourishing. the dusk of 2005 saw the emergence of a new spectrum of outsourcing services termed knowledge process outsourcing (KPO). banking. The immense growth estimated for the KPO industry in India indicates the large volumes of employment opportunities that the educated mass of the country could foresee. KPOs. This shows the enormous potential the KPO industry holds for the future of the Indian economy. with India expected to account for nearly 70 percent of this revenue. It includes engineering. It is not an exaggeration to believe that India will surely emerge among the global super powers . KPO business entities provide typical domain-based processes. The success achieved by many overseas companies in outsourcing business process operations to India has encouraged many of the said companies to start outsourcing their high-end knowledge work as well. which is generally known as Knowledge Process Outsourcing. In fact. Legal Research. domain knowledge and experience of the people carrying out the activity. WHAT IS KPO? It is being claimed that KPO is one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping into Knowledge Process Outsourcing because of its favorable advantageous and future scope. In today's competitive environment. Knowledge Processing Outsourcing (popularly known as a KPO). Many companies and organizations have come to realize that by outsourcing non core activities. experience and judgment factor. . availability of and access to a highly skilled and talented workforce and improved quality are all underlying expectations in outsourcing high-end processes to India The future of KPO has a high potential as it is not restricted to only Information Technology (IT) or Information Technology Enabled Services (ITES) sectors and includes other sectors like Legal Processes. thanks to the outsourcing boost! Benefits of KPO (Knowledge Process Outsourcing) Why should your company invest in knowledge process outsourcing? The fundamentals of outsourcing apply to knowledge based services as well. let us not treat it only a 'B' replaced by a 'K'. it is the evolution and maturity of the Indian BPO sector that has given rise to yet another wave in the global outsourcing scenario: KPO or Knowledge Process Outsourcing. The next few years could well be the golden period of the Indian economy. Engineering Services. Intellectual Property and Patent related services. not only cost are minimized and efficiencies improved but the total business improves because the focus shifts to the key growth areas of the business activity. calls for the application of specialized domain pertinent knowledge of a high level. focus is to concentrate on core specialization and core-competency areas and outsource the rest of the activities. A shortage of trained professionals shoots up the cost of maintaining such services in the host country when the same job can be done with similar precision and quality and at less than half the cost abroad. operational efficiencies. Web Development application. Cost savings. Knowledge process can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills. And when this activity gets outsourced a new business activity emerges. volume and efficiency. BPO in contrast is more about size. While KPO derives its strength from the depth of knowledge. In fact. advanced analytical skills and business expertise. Clinical Research. Business Research and Analytics.through the growth of its services sector in the next five to ten years. Publishing. rather than just process expertise. The KPO typically involves a component of Business Processing Outsourcing (BPO). KPO Industry is handling more amount of high skilled work other than the BPO Industry. Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). CAD/CAM Applications. Market Research (Market research KPO ) etc. But. "Law firms in the US charge an average of $400450 per hour. Another report predicts that India will capture more than 70 percent of the KPO sector by 2010. "Over the past year or two. Kelly Services. Evalueserve says India provided $3. In the future.this is India's strength in the off-shoring business”. Architect. . which employs 500 people and offers services in the big-buzz. Engineers.SCOPE AND FUTURE OF KPO According to a report of National Association of Software and Services Companies (NASSCOM). KPO salaries could be 25-50 per cent higher than those offered to the same domain experts such as Engineer. This is expected to have a CAGR of 26 per cent. China. a Gurgaon based outsourcing company having service chart for global world”. "Unlike the first wave which was more about entering data and answering phone calls. it said. of course. In the Indian context. and Israel are also expected to join the KPO industry. Says country general manager. Biotechnologist. Market Research (Market research KPO). it is likely to earn $30 billion in 2010 by providing these services. Lawyer. the combination of the most cost-effective and high quality manpower. Statistician and MBAs. Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010. CA. the Indian chamber of commerce that serves as an interface to the Indian Software industry. the talent is much more affordable. Ireland. and we do the same work for $75 to $100 an hour" says Kamlani" who is an outsourcing provider in the same area. the Czech Republic. big-bucks area of knowledge process outsourcing. Achal Khanna “India still maintains the competitive advantage for providing. Apart from India. CAs. and includes other sectors like Intellectual Property related services. Clinical Research. from $ 7. Legal Research. Architects." says Jacob William of the Bangalore-based Outsource2India. Hence. etc. Business Research and Analytics. According to a recent study by “Evalueserve.8 billion in the same period. Compare this with the prediction for the low-end outsourcing services market. from $1. Economist. Publishing. the global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent.2 billion in 2003 to $17 billion in 2010.7 billion to $39.5 billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of 36 per cent during 2004 to 2010. Doctor." Also. it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors. of which USD 12 billion would be outsourced to India. countries such as Russia. these jobs involve skill and expertise. the outsourcing industry has been throwing up jobs for Doctors. The rapid proliferation of globalization and liberalization has revolutionalized global business as it is conducted today. BENEFITS OF KPO Standardized technical education is now widely available to all in the developing countries. Standard operational efficiency. . It involves transfer of business processes to other geographic locations. The study estimates that while the compounded growth rate of BPO till 2010 would be just 26% KPO is expected to be grow at almost 46%. greater investments and inadequate talent. distances himself from the estimates. when the global industries realized that apart from software development and technical support. This being viewed as a very healthy sign for the global economy has paved way for the conception and implementation of new business models such as outsourcing. Nasscom vice-president research. Outsourcing to KPO firms can provide the following benefits: • • • Valuable cost savings that can be utilized elsewhere. Regional market boundaries have been erased. Sunil Mehta. This trained manpower is also accessible at very low cost as well. It started emerging in India around the turn of the century. Billing rates for KPO are higher at $30-45 per hour compared to just $10-14 in the BPO business. According to earlier estimates. However. Knowledge Process Outsourcing (KPO) is one step ahead of Business Process Outsourcing (BPO). This represents significant metamorphosis of call centre sector business to completely different model. the paper also warns of several challenges like higher quality standards. Nasscom has said the high-end activity of the BPO industry—the KPO or knowledge process outsourcing could be worth $15. Trained professionals at work. right from global corporates during their business planning to being the butt of school and household jokes.5 billion by 2010. hence a very significant portion of the sector—in excess of 50% is now projected to be knowledge based. Interestingly. compelling all closed economies to open their markets for global trade and business. It says higher savings by outsourcing knowledge based activities combined with the scarcity of specialized talent in developed countries could lead to growth in the KPO sector. OVERVIEW Outsourcing – this is by large the most uttered word today. knowledge work could also be outsourced. the BPO industry itself was expected to be about $20bn by 2008. It therefore makes sense to utilize their services. The paper cites reasons for a possible KPO boom. The projections are based on a white paper released by Evalueserve. specialized domain specific knowledge and business expertise of a higher level rather than just process expertise.In its annual publication Strategic Review 2005. Increase in profits. Operational cost saving. According to a report by Global Sourcing Now. KPO SKILLS DEFINED The following skills form the basis of knowledge-based firms and their workforce. Option to recruit a larger work force without raising costs. Converting raw technical data into presentable documents.• • • Savings in time and management energy for maintaining in house services. Indian KPO sector has already taken steps in employing highly educated and . and applying quality controls. which are responsible for the Knowledge Process Outsourcing (KPO) in India. Proficiency with various advanced software and hardware devices. Maintaining workflow. Researching information from various sources. WHAT KPO CAN DELIVER TO YOU? KPO’s work in close association with the client and provide services that are predefined in terms of quality and standard of work. KPO IN INDIA After the great success of Business Process Outsourcing (BPO) in India. pool of talented workforce. of which USD 12 billion (almost 70%) would be outsourced to India alone. meeting deadlines. With a good firm you get the following: • • • • Good quality work. infrastructure improvement and favorable government policies are the major factors. • • • • • • Analyzing data and information to produce meaningful documents. BPO success in India is encouraging overseas companies eyeing Indian market for outsourcing their high-tech knowledge based jobs. it is now the KPO turn to make its presence felt. Lower costs. the Global Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010. On time delivery of services. Use of high levels of conceptualization and theoretical knowledge. Uninterrupted services. total number of correct transactions. Engineering. Finance. Education. total customer satisfaction. total number of correct transactions.talented people and number of KPO professionals is expected to cross more than 250.000 employees. A survey conducted in 2002 by NASSCOM (National Association of Software and Service Companies) showed that an Indian ITES-BPO center in banking and financial service sector. number of transaction per hour and the average speed of answers The Indian advantage primarily lies in the educational and technical qualifications of its workforce. WHAT MAKES INDIA A PREFFERED DESTINATION FOR KPO? The Indian workforce is highly literate and they are well-versed with English language. performs better than US and UK based BPO centers in various categories like the total number of transaction. number of transaction per hour and the average speed of answers .000 by 2010 compared to the current figure of 25. Architecture and other competitive fields. trained professionals in the fields of IT. A survey conducted in 2002 by NASSCOM (National Association of Software and Service Companies) showed that an Indian ITES-BPO center in banking and financial service sector. Science. thanks to Indian educational system. The Indian advantage primarily lies in the educational and technical qualifications of its workforce. Law. performs better than US and UK based BPO centers in various categories like the total number of transaction. Every year India is producing hundreds and thousands of English speaking. total customer satisfaction. The graph on the right suggests that Expected Growth in Global BPO and KPO Markets (2003-2010). Some of the KPOs working in this area are Wipro. Some of the KPOs working in this area are Smart Analyst. technical specifications for tenders. computational fluid dynamics analysis. Atlas Legal. Ericsson. Pangea3. insurance. corporate & market research. value engineering. Alcatel. etc. Manthan Services. Some of the areas and KPOs working in these areas are: 1. etc. actuarial analytics. etc. debt collection and recovery. Office Tiger. risk assessment. negotiations. Nokia. research memoranda & due diligence reports. reviewing transactional & litigation documents.CLASSIFICATION OF KPO (KNOWLEDGE PROCESS OUTSOURCING) BY SEGMENTS Legal Services: These include drafting contracts. etc. equity research.Telecom R&D: Qualcomm. 3D conversion and modeling. The Smart Cube. . fund management. Lucent Technologies. Engineering and R&D: These include finite analysis. prosecuting patents. Financial Services: These include financial data mining. underwriting. 3. etc. content development. data enrichment & warehousing. Microsoft. etc. Copal Partners. SAP Labs. Google. General Motors. Yahoo. SWOT ANALYSIS FOR KPO (KNOWLEDGE PROCESS OUTSOURCING) STRENGTHS • • • • • • • • • Large talented pool Quality IT training Low labour costs Success of BPOs Good knowledge of project management skills Supportive government policies Many new areas of specialization are being covered making KPO sector spreading its wings Consideration to quality standards like ISO 900x and Six Sigma Billing rates are lower as compared to billing rates in other countries . GlaxoSmithKline. HP. CRISIL. pre-press work. teaching. IBM. Adobe. BMC Software. Education and Training: These include private tutorials. etc. AstraZeneca. Pharmaceutical and Biotech R&D: These include clinical research. Inductis. text composition. Dr. conversion of findings to knowledge. drug discovery. digitization of content. Some of the KPOs working in this area are marketRx. Delphi. Path Labs. etc. Some of the KPOs working in this area are Bayer. Sun MicrosysteAuto/Engineeringms. Eli Lilly. Market Research and Analytics: These include services like writing & editing. Baan. curriculum design. secondary & primary research. etc. OfficeTiger. HIV & allergy. research & development. etc. template designing. Evalueserve. proofreading. Whirlpool. formatting client reports. genetic profiling. Ranbaxy.2. Avesthagen. Plexion.Software R&D: Phillips. Biocon. Healthcare Services: These include diagnostic. Pipal Research. oncology tests.Auto/Engineering: Neilsoft. DaimlerChrysler. Some of the KPOs working in this area are Clingene. K-12. etc. Writing and Content Development: These include services like content delivery. Quest. Animation & Design 5.WEAKNESS • Immoral and unethical practices related to handling of crucial data • Rising wages • The inability to uniformly develop and provide infrastructural requirements as real are rising in major cities. What high-end services can be outsourced to the Indian KPO sector? Here are some KPO services that can be outsourced to India:1. Pharmaceuticals and Biotechnology . Learning Solutions 4. • Inadequate Intellectual Property Rights (IPR) protection regime in India • Billing rates are higher as compared to billing rates in BPOs estate prices OPPORTUNITIES • • • Increasing domain expertise More areas of specialization can be added to KPOs Ample opportunities for SMEs THREATS • • Non retention of talent Expected labour supply gap as jobs grow faster than the workforce. Research & Development 2. Business and Technical Analysis 3. Business & Market Research 6. Writing & Content Development 9.7. While the sectors had thrived until now in . quality IT training. the lack of talent pool. India is well equipped to meet this emerging sector's challenges and all set to be the global KPO hub EXTENDING THE ROLE OF GOVERNMENT AS FACIITATOR It was also felt that the Government had to step up its role in the IT-BPO industries. Data Analytics 12. it is not surprising that India has been ranked the most preferred KPO destination owing to the country's large talent pool. Some of the challenges involved in KPO will be maintaining higher quality standards. Comparing these challenges with the Indian IT and ITES service providers. Training & Consultancy THE CHALLENGES IN KPO KPO delivers high value to organizations by providing domain-based processes and business expertise rather than just process expertise. These processes demand advanced analytical and specialized skill of knowledge workers that have domain experience to their credit. friendly government policies and low labor costs. investment in KPO infrastructure. Intellectual Property (IP) Research 11. Medical Services 8. Network Management 13. especially for growing the Indian domestic market. as a facilitator and a catalyst. confidentiality and enhanced risk management. requirement of higher level of control. Legal Services 10. Therefore outsourcing of knowledge processes face more challenges than BPO (Business Process Outsourcing). CBDT) has allowed total income tax exemption on the export of IT enabled outsourcing services under Sections 10A/10B of the Income Tax Act. Permission of duty-free imports of capital goods (under the Export Promotion of Capital Goods scheme) for BPO companies. Engineering & Design services vi. Human Resource Services viii. the Government of India has introduced various policy concessions and initiatives to accelerate the growth of the IT-enabled outsourcing market. India was among the first few countries to put in place the legal infrastructure for electronic transactions and e-commerce. 1961. STPs also allow single-window clearance for all regulatory compliance . It had already amended the Information Technology Act to keep pace with changes in technology. Call Centres iii. Insurance Claim Processing ix. Legal Database x. Furthermore. Medical Transcription xi. a helping hand from the Union and State Governments would be beneficial. Back-office Operations ii. Data Processing v. Recognizing the growing importance of the business process outsourcing. These IT enabled products or services are:i. the Indian software and services industry has also taken various steps to ensure that India becomes the global hub for IT-enabled outsourcing in the future. The Government of India (Central Board of Direct Taxes . rather than a barrier to progress and innovation. Some of the steps take by the Government and industry for the ITES/BPO sectors are as follows: In May 2002. Support Centres. Remote Maintenance xiii.an environment marked by little Government involvement. The Government has promoted several Software Technology Parks (STPs) which provide ready-to-plug IT and telecom infrastructure. lack of regulatory constraints and openness. the policy framework would continue to be supportive and enabling. Spearheaded by associations such as National Association of Software and Service Companies (NASSCOM). Revenue Accounting xiv. The PM pointed out that the Government had already contributed in a positive way. Geographic Information System Services vii. Content Development or Animation iv. Payroll xii. the Government of India has accepted the recommendations of NASSCOM and removed certain procedural bottlenecks that were hampering the growth of the Indian call center industry. and xv. Web-site services Foreign Direct Investment (FDI) for 100 percent of the equity has been permitted in BPO companies. going forward. issues. Currently. several STPs have been established across India covering most of the major towns/cities COMPARISON OF OPPORTUNITY IN BPO AND KPPO MARKETS Low-end outsourcing services have an expected Cumulative Annual Growth Rate (CAGR) of 26% by 2010. In contrast. . The following figure demonstrates the expected growth in the BPO and KPO markets over the next seven years. the global KPO market is poised for an expected CAGR of 46% by 2010. understanding of business and analytical bent of mind It involves skill and expertise of knowledge workers with excellent educational background. expertise and analysis on complex areas like Legal Services. It just occupies the higher end of the BPO spectrum.POINT WISE DIFFERENCE BETWEEN BPO AND KPO BPO • KPO • It provides services like customer care. Says Karnik. some experts say that KPO is not different from BPO." . CONCLUSION ON KPO v/s BPO The dividing line between KPO and BPO is still very faded. KPO is a subset of BPO. etc. It is only a kind of BPO. technical support through voice processes. High end services Knowledge expertise Requires application. Business & Market Research.so. "Broadly. tele-marketing. etc. sales.qualified workers as it focuses on communication skills • • • • • • • • KPO provides in-depth knowledge. Low end services Process expertise Pre-defined processes It employees not. why not broaden the scope to include financial analysis?" As in the words of Pavan Bagai. Design & Animation." In BPOs there is a predefined way to solve a problem. There is no pre-defined process to reach a conclusion. vice president EXL Service – "Imagine unsorted data going through a black box and coming out as useful information. Research & Development. Low-end outsourcing services have an expected Cumulative Annual Growth Rate (CAGR) of 26% by 2010. These processes demand advanced analytical and specialized skill of knowledge workers that have domain experience to their credit. In contrast. But the way to becoming a strong KPO power is not very smooth As KPO delivers high value to organizations by providing domain-based processes and business expertise rather than just process expertise. Some of the challenges involved in KPO will be maintaining higher quality standards. It is its natural progression. KPO owes its existence to BPO. In KPOs the black box is your mind. quality IT training. in a financial service BPO. data entry of invoices has been around for some time. Biotechnology. it is not surprising that India has been ranked the most preferred KPO destination owing to the country's large talent pool. setting up a bank account. Paralegal Content and even Intelligence services that can be put to use in a KPO. Comparing these challenges with the Indian IT and ITES service providers. friendly government policies and low labor costs . "KPO is the next step in the outsourcing pyramid. selling an insurance policy. BPOs will normally include transaction processing. The myth that Indian companies can only provide "software coolies" is soon changing to the reality of Indian companies being capable of almost anything. But given the value-for-money Indian BPOs have shown. confidentiality and enhanced risk management. investment in KPO infrastructure. Therefore outsourcing of knowledge processes face more challenges than BPO (Business Process Outsourcing). Analytics. Education & Training.In fact. Engineering. technical support. requirement of higher level of control. Medicine. After reaping the benefits of outsourcing low-end processes to India. Law. international companies are thinking. voice and email-based support. the global KPO market is poised for an expected CAGR of 46% by 2010.It’s very evident from the about discussion that the KPOs are the next big thing about to happen in India. the lack of talent pool. even rocket science! India has a large pool of knowledge workers in various sectors ranging from Pharmacy. foreign companies are now trying their hands at outsourcing high-end processes to the country. The following figure demonstrates the expected growth in the BPO and KPO markets over the next seven years. For instance.