Nearshore Americas

KPO Described as “Next Wave’ of Global Outsourcing

Source: The Economic Times 

For advertising executive Govind Nair, working in India’s outsourcing industry for a California telecoms firm means burning the candle at both ends for his customers.

“They try to be considerate. They know there’s a 12-and-a-half-hour time difference between India and San Francisco but we still end up getting up early and going to bed late,” Nair, 30, says.

Such hours are becoming increasingly routine for many young Indian professionals as they liaise with counterparts in the United States and other Western countries on high-end “smart work” projects.

India, known as the world’s largest back office with its cheaper, educated English-speaking workforce, is expanding its “knowledge processing outsourcing”, offering market research, statistical analysis, legal, health and a host of other services.

The sector — familiarly known as KPO — “is the next wave of global sourcing for India”, Som Mittal, head of the National Association of Software and Services Companies (Nasscom) told an industry conference last week.

Performing “value-added tasks” such as writing equity reports and legal work can mean 40 to 50 percent higher billing rates than for lower-value jobs in call centres fielding inquiries about bank accounts, industry officials say.

KPO revenues have been growing at 26 percent annually according to research house Crisil, outpacing the overall expansion of the flagship outsourcing industry that has helped make India an emerging market powerhouse.

The country now has 70 percent, or $2 billion, of the $2.9 billion global KPO industry, Crisil says. North America provides 65 percent of the sector’s revenues, Britain 20 percent and continental Europe 10 percent.

Nasscom believes the fresh economic troubles in Europe and the United States may accelerate KPO sector growth as Western firms seek to harness the technical and financial expertise of India’s supply of university graduates, lawyers, accountants and MBAs.

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“India has a tremendous advantage in its technical, analytic and managerial skills,” Matthew Vallance, chief executive of one of India’s biggest back office companies, Firstsource Solutions, told AFP.

The $2 billion is still a fraction of India’s overall outsourcing revenues, expected to total $68 to $70 billion this year. But Crisil forecasts in a new report that revenues from outsourcing knowledge-intensive skills will nearly triple to $5.5 billion by the end of 2015.

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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