India has built strong international credibility in the BPO market and this has paved the way for many international firms to explore other outsourcing opportunities. The KPO or Knowledge Process Outsourcing goes beyond outsourcing standard routine business processes to those involving high end value added tasks in which execution depends on skill, expertise, domain knowledge and experience of the experts handling the tasks. This presentation briefly summarizes how India is poised to take on this next wave of outsourcing i.e the KPO business.

1. KPO Market Analysis in India
Preeti Anand

2. Executive Summary
Executive Summary
The evolution and maturity of the Indian IT/BPO outsourcing sector has given birth to yet another wave in global
outsourcing - KPO or Knowledge Process Outsourcing. In contrast to BPOs that focus on executing routine
standard jobs requiring less intensive skills, KPOs outsource high-end knowledge based work.
The key drivers for off shoring high-end processes can be viewed both on a strategic as well as tactical level. Cost
savings, operational efficiencies, access to a global talent pool and improved quality are all underlying
expectations in off shoring high-end processes. These help in the realization of a firm’s strategic objectives in the
need for flexibility, significant reduction in time to “go to the market”, increased competition in the global market
and cost pressure.
As in the BPO market, India is well poised to be a global leader in the KPO business. India’s existing dominance in
the offshore business makes it a trusted ally. In addition, India’s advantages lie in favourable government policies
and cost arbitrage. However, what would be a true differentiator for India in the global KPO market, is its rich and
diversified talent pool. India produces a large pool of knowledge workers in various sectors ranging from
Pharmacy, Medicine, Law, Biotechnology, Education & Training, Engineering, Research & Development etc, and
this talent is being discovered and tapped by leading businesses across the globe. The diversity of talent has
resulted in a variety of high-end services being off shored by a multitude of players in the market. Government
backed initiatives will further fuel the development of talented workforce in India.
While there are reasons to believe that India is set to dominate the KPO market, a host of issues can seriously
impact or even derail the projected growth. Potential concerns include macro-environment issues such as
terrorism, bureaucracy, rising public opinion against outsourcing etc., in addition to industry related concerns
pertaining to employee turnover, management control and data confidentiality.
In summary, even though India is well equipped to meet this emerging sector's challenges and is all set to be the
global KPO hub, potential issues may impact the country’s intended growth in this market. Global businesses
looking to utilize KPO services should be cognizant of this and be equipped with suitable risk mitigation strategies.
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3. Agenda
Executive Summary
Executive Summary
Agenda
Overview of KPO Industry
India as a leading KPO destination
Analyzing KPO Market in India
Current & Future Challenges
Conclusion

4. KPO in the next big step in the outsourcing value chain
Evolution in Global Outsourcing Key Drivers of KPO industry
Strategic
• Significant reduction in time to market
• Increased flexibility in responding to rapidly
• Execute dynamic business driven process changing business environment
• Highly advanced skill requirement ( •
high
Faster Innovation cycle
Analytical & Technical skills, Judgment &
Decision Making, etc)
• Participation in business decision
Value Chain
• Primarily driven by value consideration
Tactical
• Execute standard routine process • Cost Saving & Operational Efficiencies
• Low skill requirement • Access to global talent workforce
low
• Usually work on non-core business activity • Improved Quality
• Primarily driven by cost considerations
• Flexibility in resource management
Complexity
Enterprise 7 • Leverage time zone differences
low high
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5. Agenda
Executive Summary
Executive Summary
Agenda
Overview of KPO Industry
India as a leading KPO destination
Analyzing KPO Market in India
Current & Future Challenges
Conclusion

6. India has a booming off-shoring market and is an
established leader
Global outsourcing Market Indian IT off-shoring Market Growth
(estimates in $ billion)
60
India 39-40
Rest of 45%
the World 23.6
55%
12.8
2004 2006 2008 2010
Source: XMG Global, 2009 year end forecast Source: NASSCOM
• Solid brand equity as a result of being a preferred outsourcing destination
• Estimated that 400 of the Fortune 500 companies have their own branches in India or are outsourcing to India
utilizing Indian technology companies
• Ability to offer 24×7 services and reduction in turnaround times by leveraging time zone differences with respect to
the US and other developed markets.
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7. India has a strong value proposition : Encouraging
policies and cost advantages
Favourable Government Policies Lower Cost
• Host of economic incentives and tax holidays for firms • According to ICRA report in 2004, global outsourcing
involved in IT/ITES and for exports industry saves as much as 75-80 per cent by setting up
operations in India
• Encouraging investment through setting up of SEZs and
Industrial parks • Indian KPOs offer reduction ratios of around 1:4th to
1:5th of what they cost in developed world
• Initiatives in education
• Labour costs have crept upward over the years but have
• Proposal to allocate INR 3 trillion for education as part of its been offset by falling telecom rates.
Eleventh Year Plan (2007-2012)
• Includes setting up 30 new universities, 8 new IITs, 7 new IIMs,
20 new IIITs, 5 new Indian Institutes of Science, 2 Schools of
Planning and Architecture, 10 NITs, 373 new degree colleges
and 1000 new polytechnics will also be set up
• Focus on Infrastructure development
• Telecom: Huge surge in private Telecom players; significant
drop in rates and also better services
• Development of roads and highways infrastructure; Golden
Quadrilateral; development of Airports, sea ports etc.
• Power sector: reforms in the power sector to improve power
supply to IT/ITES companies
Source: KPO Experts
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8. India has a strong value proposition: Large Talent Pool
The rich and diversified talent allows more complex business task to be out sourced
• Large, skilled workforce: According to a report by NASSCOM,
India has the largest English speaking IT talent pool in the world Employment figure : IT/ITES Sector
2,010,000
• English speaking workforce : India is the 2nd largest nation to
1,630,000
have the most number of English speaking citizens
1,293,000
1,058,000
• World renowned educational institutions: Institutes like the
IIMs, IITs, AIIMS, National Law School etc. have created a
global brand
• Number of PhDs: According to National Knowledge Commission
report, India has seen a growth of 20% in the number of doctorates
in 2009 2005 2006 2007 2008
Source: NASSCOM
• Young talent pool: India has 550 million below the age of 25 with the potential to constitute one-fourth of the global
workforce by 2020
• Reverse brain drain: Rapid rise of the software industry in the country has helped create rewarding employment
opportunities within the country for highly skilled NRIs
• Large and impressive Diaspora: The Diaspora has helped create valuable knowledge linkages and networks while also
driving investments to the nation
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9. Agenda
Executive Summary
Executive Summary
Agenda
Overview of KPO Industry
India as a leading KPO destination
Analyzing KPO Market in India
Current & Future Challenges
Conclusion

10. The KPO market in India is undergoing an accelerated
growth path
India’s estimated share in the
Estimated growth global KPO business by 2010
CAGR
20 46% $17 B
15
10
5
$1.2 B
0
2003 2010
Source: Evalueserve Source: Evalueserve
According to some estimates, there are about 100,000 people working in the
Indian KPO industry
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11. India is a leading KPO destination
Services Market Players
Source: Evalueserve
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12. Agenda
Executive Summary
Executive Summary
Agenda
Overview of KPO Industry
India as a leading KPO destination
Analyzing KPO Market in India
Current & Future Challenges
Conclusion

13. Attrition is a challenge
Demand for KPO Jobs will outgrow
Supply in 2010 Stiff competition for Talent
• Competing demand from other sectors (non-KPO)
Resource as jobs grow faster than the workforce
Gap 250
(‘000)
• Growing competition within the KPO industry
100
Supply Demand
Source: Rocsearch
However, due to the global recession, it is expected that • The Rocsearch study reveals that just 2 in every
overall attrition levels are likely to go down as job markets 100 of those employable in global firms are likely to
tighten up and not many new deals happen. opt for work in knowledge space
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14. Bureaucracy and Safety are concerns
Bureaucracy Safety
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15. Management, legal and national issues
Management issues Legal issues
• Quality of personnel and work cannot be guaranteed
• Possibility of compromising confidential company data, or
• Can introduce massive delays as the work is in the Intellectual Property
hands of the outsource service provider
• Privacy laws vary from one country to another
• The cost of negotiating, managing, and overseeing a
detailed contract can also be great
• Idealized expectations regarding the return on
Four former employees of Mphasis, an Indian call center outfit,
investment and the time it will take. Many firms
were arrested for stealing more than $426,000 from the accounts
envision drastic cost savings of up to 80%.
of U.S.-based customers of Citibank
British tabloid, The Sun, reported that it was able to purchase
confidential data on more than 1,000 Britons from an employee of
National issues an outsourcing company based in the New Delhi suburbs
•A public opinion poll in the US in 2006 revealed that
26 per cent of respondents are worried about global
economic competition and the outsourcing of An employee of HSBC's call center in Bangalore was accused of
American jobs selling customers' credit card details to people in Britain, who then
skimmed thousands of pounds from the customers' accounts.
•President Barack Obama's proposal disallows tax
deduction for company's outsourcing their business UK‘s Channel 4 TV station conducted a sting operation exposing
middlemen trading the financial data of 200,000 UK citizens
•EU issues Transfer of Undertakings (Protection of
Employment) Regulations 2006, protecting employees
whose business is being transferred to another
business
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16. Agenda
Executive Summary
Executive Summary
Agenda
Overview of KPO Industry
India as a leading KPO destination
Analyzing KPO Market in India
Current & Future Challenges
Conclusion

17. “India's transition from a BPO destination to a KPO destination is imminent ”
- Confederation of Indian Industries
Even so outsourcing is not without its share of risks, and hence a comprehensive risk analysis and
mitigation plan should be part of a firm’s outsourcing strategic plan
….But is not a country of low
hanging fruits
•Employee Turnover
India is an powerhouse with •Frequent social & political
tremendous growth potential in instability
KPO
•Data Thefts
•Huge talent pool
•Low cost location
•Favorable Governmental policies
•Established brand in outsourcing
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