Kudos to India's KPOs
India has emerged as the most successful player in the KPO business, says Shrikant Neurgaonkar
In Indian parlance, Business Process Outsourcing (BPO) stands for everything that is outsourced to a third party. However, a second — superior — dimension, the KPO, is now becoming the first choice for many. This relatively new industry generates as much as $15 billion (about Dh55 billion) for India every year. The KPO is one step ahead of the BPO. It is an extension of business with high value-added processes where the achievement of objectives is dependent on the skills, knowledge and experience of the people engaged in carrying it out. When this activity is outsourced, it is known as Knowledge Process Outsourcing.
Many overseas companies have achieved great success by assigning their basic BPO activities to India, which has encouraged many of them to start outsourcing their high-end knowledge work as well.
The easy availability of a skilled and talented workforce in the country, together with cost savings, operational efficiencies and tangible quality are basic expectations in outsourcing high-end processes to India. While the initial trend was restricted to the ITES industry (Information Technology Enabled Services), this has been increasingly supplemented by many other areas like legal and architectural processes, engineering services, web development and CAD/CAM (Computer-Aided Design and Computer-Aided Manufacturing) applications, business research and analytics, legal, clinical and market research and publishing.
World's preferred KPO destination
There are key reasons why the country has emerged as the most successful player in the KPO business. India produces over 25,000 IT graduates and 200,000 English-speaking graduates annually with typical salaries ranging from $3,500 to $12,000. Governmental policies in India have always worked in favour of KPOs. Despite India's redundant telecom and utility infrastructure, developed business parks have proven to be a welcome and reliable exception.
Basic analysis of India's advantages will reveal that it is automatically a preferred choice for companies and countries that engage in outsourcing. India has a growing population of educated people who are capable of handling knowledge-based work and research, and with this huge talent pool, the country has emerged as the world's KPO hub. With the mushrooming of engineering and technical institutes in India, there will be no future shortage of skilled manpower either.
Another advantage is the cost factor; India offers a cost saving of more than 50 per cent in most jobs. When it comes to skilled or specialised activities, we are easily able to offer savings of more than 100 per cent.
Wages in India have increased considerably in the last few years, which is a worrying trend, for if it continues, many companies will find it difficult to sustain business. The attrition rate in the KPO business is very high, and companies continue to suffer a shortage of skilled manpower, especially when particular skill sets have tremendous demand. And finally, other developing nations are trying to work their way into this field and grab a slice of the big pie. As these competing countries get accustomed to better English-speaking skills, build a pool of educated people, and improve their infrastructure offerings, they are also likely to opt for working at lower profits — something that Indian companies are simply not accustomed to.
Analysts had us thinking that China would head the KPO way in 2008, but it is not reality yet. Learning English and specialised skills is still a struggle for many Chinese.
When I visit China, I am amazed to find youth learning to speak English in most of its cities. I take recourse in the simple fact that when I am in India, youth in all our cities and towns and many villages are already speaking English — quite fluently.
