Need to address new markets, says Ernst & Young

Our Bureau

Mumbai, Nov 10

The Indian KPO Industry must consider setting up delivery centres in regions such as China, eastern Europe and South America to address new markets and tap local talent, according to a Ernst & Young (E&Y) Survey Report released today at the Global Offshore Outsourcing Summit (GOOS) 2006.

The survey, titled `Global Sourcing of Knowledge Services,' said that the overseas strategy will give Indian service providers the edge over local competition and help establish themselves as truly global players.

Mr Milan Sheth, Associate Director, E&Y, said: "We have concentrated on the supply side of priorities for leadership as there is a need to understand the customer's requirements in the KPO industry."

As per Nasscom estimates, the KPO market would be worth $15.5 billion in India by 2010.

"By 2010 India is expected to capture 70 per cent of the world KPO market and employ a workforce of 2.5 lakh," said Mr Pramod Bhasin, President & CEO of Genpact.

Mr Michael Owen, US Consulate-General, said that as India becomes adept at knowledge processing, it should put an intellectual property rights (IPR) regime in place.

Attrition issues

"The remuneration packages in the Indian KPO industry will stabilise to about 40 per cent of that of the US in the years to come," said Mr Amit Bhatia, CEO (Knowledge Services), WNS Group. This could go a long way in curtailing KPO attrition rates, a pressing issue for the industry today.

Attrition in large companies is about 20 per cent, said Mr Bhatia.

The challenge for KPO companies is to retain talent at the top level to inspire confidence among customers at the highest level of the value chain.

"We have to rework our compensation and reward models and also educate our workforce," said Ms Anita Ramachandran, CEO of Cerebrus Consultancy. Analyst firm Gartner had predicted in 2005 that as many as 70 per cent of the top 15 Indian BPO start-ups will cease to exist in the coming months.

Experts believe that this could soon be a reality in the KPO industry as well.

Mr Bhatia said, "This is not an industry where you will see 150-200 players on a sustainable basis, but 15-20 players will rule the roost," indicating possibilities of consolidation in the foreseeable future.

(This article was published in the Business Line print edition dated November 11, 2006)
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