The limitation arises from low employability of the graduatesand the competing demand from the domestic industry as the economy grows rapidly.

Neha Kaushik

New Delhi, Aug 6

The next big opportunity may be in knowledge process outsourcing (KPO), but a severe talent crunch may impede India's aspirations in the industry in the coming years.

According to a study, analysts may have overestimated the supply of skilled workers in India and that the bright prospects for the KPO sector may be dimmed by supply side issues.

The study carried out by UK-based research services firm RocSearch states that the KPO market in India may reach a size of $5 billion by 2010, with 100,000 people, against earlier projections of a $12-billion market with 250,000 people.

And this is despite the large number of graduates and post-graduates that pass out from Indian Universities every year.

As per estimates, there is an annual addition of over three million graduates and professional degree and diploma holders to the existing talent reservoir of over 100 million.

According to the survey, the limitation arises from low employability and the competing demand from the domestic industry as the economy grows rapidly.

Further, recent data reveals that the number of jobs in India are growing faster than the workforce.

The high unemployment rate among professionals in a scenario of rising labour demand also suggests other factors affecting supply, according to the survey.

A part of the reason for high unemployment stems from the problem of employability.

Only a small fraction of the qualified labour force can be considered suitable for employment in companies operating in the global arena.

Low employability could be attributed partly to the mismatch between industry requirements and the academic curricula of most professional colleges.

"Our estimates reveal that only over 500,000 of the over three million educated workers added to the labour pool in 2005 could be considered employable in a world-class company," the survey said, adding that the total number of people working in the KPO industry would not be more than 100,000 by 2010 from the current rough estimate of 25,000.

Further, assuming average revenue per person of $55,000 over the next four years, the knowledge services market in India is likely to be worth $5 billion.

(This article was published in the Business Line print edition dated August 7, 2006)
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