Stricter US regulations to boost Indian KPO growth

Our Bureau Updated - October 13, 2012 at 10:02 PM.

The current uncertain economic environment and increased regulation will drive greater spend on analytics. And Indian service providers stand to gain from this.

A recent Avendus Capital report points out how exactly Indian service firms will be better off in the future. The report said the US Government, through the slew of regulatory reforms such as Dodd-Frank, the CARD Act and Basel 3 after the Lehman crisis, is keen on greater emphasis on risk management and stringent reporting requirements.

It has also been stressing the need to develop business models that would flag errors real time. This new focus on safety will undoubtedly push up spending on building analytics capabilities.

The report predicts that demand will continue from developed economies as outsourcing of core business activities (such as clinical trials in the healthcare sector) is gaining acceptance.

The service field is now maturing, going beyond call centres to knowledge-based activities that involve analytics. This knowledge services market is growing at a 22 per cent CAGR, from $2.9 billion in 2010 to an estimated $7.9 billion by 2015, according to Avendus. Further, according to the report, the global data analytics outsourcing market was estimated at $500-550 million in 2010, of which India contributed 70 per cent, employing 70,000 professionals. This accounted for 19 per cent of India’s $2 billion offshore knowledge services (KPO) market.

By 2015, the data analytics market in India is expected to reach $1.15 billion to become 21 per cent of the overall Indian KPO market opportunities of $5.6 billion.

India will continue to enjoy its leadership position in analytics services over other competing regions such as China, Eastern Europe, the Philippines and Latin America.

“However, inability of large end-user companies to attract and retain talent, especially in specialised areas like regulatory compliances continue to be a concern area,” said Amit Singh, Executive Director (Technology and Outsourcing), Avendus Capital.

> venkatesh.ganesh@thehindu.co.in

Published on October 13, 2012 16:32