Talent crunch may shrink KPO business by 30%: ASSOCHAM
posted in Outsourcing News and Top Outsourcing deals |Source: www.indiainfoline.com
The domestic KPO industry needs to tighten its service level agreements to provide quality services and also needs to attract more revenue by entering into partnerships with big financial service organisations
Nearly 30% shortfall is likely in the Knowledge Process Outsourcing (KPO) business by 2012, which according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM) would stagnate at US$10.5bn against the projections of US$15bn mainly on account of lack of talented professionals in the absence of relevant institutions for imparting KPO skills in India.
Not only professional shortages of skilled KPO workforce would be acute by then but emerging competition from low-cost destinations of countries such as Philippines, Russia, China, Poland and Hungary would also hit domestic KPO prospects, warns ASSOCHAM.
In a paper on ‘KPO Industry in India’, the industry chamber has stated that the KPO industry would be able to sustain its current phase of growth of nearly 18-20%, with employment opportunities for 30,000 workforce and revenue generation potential of about US$3.8bn, provided institutions of repute are created so that new talent emerges to take on future challenges.
As per ASSOCHAM estimates, a vast pool of highly educated professionals in engineering, medicines, management, accountancy, company secretary and legal would be required to serve the KPO industry. Their number as per rough estimates should be well within the range of over one lakh as against the current numbers of 30,000.
According to ASSOCHAM, countries like the Philippines, Russia, China, Poland and Hungary are emerging as strong contenders for the KPO business in view of low-cost advantages, domain expertise, location advantage, sales and marketing capabilities and data compliance.
Appreciation of the Indian Rupee vis-a-vis US Dollar is gradually making Indian KPO companies less competitive, and with rising costs, their captive centers in India are also outsourcing some of their work to third party vendors.
The domestic KPO industry needs to tighten its service level agreements to provide quality services and also needs to attract more revenue by entering into partnerships with big financial service organisations, ASSOCHAM says.
While some of the Indian companies are coming out with the security framework which simultaneously increasing costs of industry and make them less competitive. Overseas clients often hesitate to offshore research and processing of sensitive financial data and information involving strategic decisions.
ASSOCHAM President Venugopal N. Dhoot says it is difficult for the KPO companies to always find a qualified, experienced and talented workforce in India which is easier for the BPO companies. Considering there is no dearth of engineers, doctors, MBAs, lawyers etc. in India, the KPO industry was banking on the availability of this talent pool to fill up its seats but now they are facing the supply crunch.
According to ASSOCHAM estimates, currently over 260 KPO companies are operating in India and the number can be reached at 350 by 2008 with employment opportunities for qualified professionals to the extent of 100,000. Some of the big companies like Genpact, Evalueserve, WNS, 24/7 Customer, EXL Service, Copal Partners, HCL Tech and Wipro are providing variety of KPO services.
However, the KPO sector has potential to attract career aspirants and professionals as the sector provides revenue higher than the BPO industry. The salary ranges are 12-15% higher than the BPOs industry and even the entry level earnings are more in it. A customer care office in KPOs can earn Rs1.5 to Rs1.7 lakh per annum while a technical support office can also earn the similar amount. The voice and accent trainer can fetch Rs2.25-2.50 lakh per annum whereas a team leader can earn around Rs3-4.5 lakh annually.
The ASSOCHAM analysis also predicts that KPOs has also other advantages like better work tools and processes, more sophisticated client centricity, higher billing rates and more domain focused organisations.
KPO is a quick-money sector and can also provides long-term jobs as well for the youths and professionals. Well-educated, knowledgeable, analytical and deserving candidates can make handsome money in this sector, far more than what is being paid in the BPO sector. Unlike BPO, a temporary enumerative option, professionals are taking KPO industry as a long-term career option.
KPO jobs are more challenging as it provides domain knowledge, business and process expertise with analytical skills for analyzing data, usage of resources for information research, making presentable reports from raw data. While BPO is about repeatable process which needs quick learning and have larger workforce base compared to KPOs. In BPOs, there is low involvement with clients and low hourly billing rates whereas in KPOs, there is a constant involvement with clients.
