India seeks higher-value outsourcing work

Chennai: In an office in the southern port city of Chennai, Indian analysts pore over stock market data for a London-based fund company, searching for investment opportunities.

Some 1,200 miles away in Gurgaon, on the outskirts of Delhi, Indian lawyers have taken over research and patent filing for several Western technology and healthcare companies.

These are examples of knowledge process outsourcing (KPO), a new fad across India, where companies are trying to move up the value chain and away from call centres staffed by young people tutored in American accents.

As well as examining financial data and drafting patents, firms in India are managing payrolls and accounts for Western companies, carrying out market research and doing a host of other high-value tasks.

The knowledge process market in India is worth $2.5 billion to $3 billion a year, and is likely to grow to $10 billion to $12 billion by 2012, said Ashish Gupta, chief operating officer of Evalueserve, a knowledge process firm with about 1,500 employees in India, China and Chile.

Driving this boom are huge cost savings for Western companies and bigger fees for Indian companies than they can earn from running call centres. Although salaries in India are rising, they are way below Western wages.

Patent research can be done in India at $50 to $80 an hour, compared with $150 to $350 in the United States, said R. Sivadas, chief executive of Scope e-Knowledge Centre Pvt. Ltd. in Chennai, which has clients in publishing, healthcare, and engineering.

Average billing rates in the knowledge process sector are 40 to 50 per cent higher than those in the call centres, said Sivadas, whose company employs 485 people, 95 per cent of them engineers and medical doctors.

"We have just touched the tip of the iceberg. In the next 6 to 8 years, KPO is definitely going to be a growth story," said Sivadas, whose firm will raise staff to 680 by March 2008.

Another such firm is Sundaram Finance Ltd., which set up a back-office subsidiary six years ago to provide research services to local financial firms and now has 23 clients from Britain, Australia, Singapore and the Middle East who have outsourced jobs like market and data research.

In January, India's Hinduja TMT Ltd. and British-based business consulting and outsourcing firm Centric Consulting Ltd. entered into a joint venture with law firm Fox Mandal Little to provide legal outsourcing service.

Indian software majors Infosys Technologies Ltd. and Wipro Ltd. are also vying for a bigger share of the KPO business.