KPO Anticipate Growth in The Indian Market

The Business Process Outsourcing (BPO) has seen unambiguous growth in the Indian soil. Now the entire world is looking at India as the most sought after place for Knowledge Process Outsourcing (KPO). Many overseas companies have been eyeing Indian market for outsourcing their high tech knowledge based jobs. Same as in the case of BPO, benefits like operational cost saving, pool of talented workforce, infrastructure improvement and favorable government policies have been responsible for KPO to flourish in India. 

Today’s economy being knowledge economy, KPO is a continuous procedure of creation and dissemination of information by bringing together the information industry leaders to create knowledge and see meaning in information and its context. This information driven outsourcing is known as KPO. 

Experts suggest that the global KPO industry is expected to reach USD 17 billion of which almost 70% would be outsourced to India alone. Keeping this in mind, Indian KPO sector has already taken steps in employing highly educated and talented people and number of KPO professionals are expected to cross more than 2 lakh by next year compared to the current statistics. In fact the growth in the KPO segment would be higher than the BPO segment, reveals research. 

India has a large pool of knowledge workers in various sectors ranging from pharmacy, medicine, law, biotechnology, education and training and even intelligence services. This proves that not only Indian companies can handle software services but capable of almost anything. However, long term success of KPO in India largely depends on a holistic approach to the issue.

HR Business outsourcing gets a new face

Full spectrum outsourcing came into existence in the end of 90s and since then has left a mark in the HR BPO sector. Any process that includes the transfer of transactional elements of five or more major HR processes to an outsourcer at one time comes under the full spectrum outsourcing. On the whole, any company that gives the outsourcer control of any combination of HR functions, including benefits, health and welfare, performances, measurements and rewards technology and so on is making use of full spectrum. 

But recently the HR BPO sector has seen a drastic make over with radically transforming how HR services are delivered. Organization relying on the outsourcers sheds the burden of holding transactional, repetitive yet important but low vale added parts of HR and concentrate on the five essentials; sourcing, hiring, training, rewarding and developing human capital. According to Naomi Lee Bloom, an expert in the HR BPO industry, about 10% of Fortune 500 companies have some kind of HR BPO deal that covers full spectrum outsourcing. 

In fact many experts unanimously believe that HR BPO is the fastest growing segment of the overall business process outsourcing market. And henceforth it has become enormously competitive as many vendors are seeking the deal. Being a profit endearing industry, the outsourcing business has attracted a large number of vendors in the recent years and has been leading towards consolidation. Reason being this demand is mainly because HR BPO can lower the total cost of HR service delivery by 20% to 30% for the part of the service that is outsourced.

How India shines in BPO industry?

When it comes to a combination of wage levels, education, fluency in English and sheer numbers, India stands first in BPO industry around the globe. This is the reason why Indian BPO sector is always in demand even when it faces competition from other countries. 

Take the case of Philippines, which has been evolving as a strong competitor is good in English language and has a strong American accent and hence captures much of the voice based services. But coming to the IT skills, they are backward. On the other hand, countries like China, Russia and Eastern Europe have good IT skills, but they are very strong in English. Here India exceeds in language fluency as well as IT skills. 

Report suggests that India’s work pool consist of 200 people who are now 15 years or younger poised to enter its workforce in five years. By then the working age population will drop significantly in the US, Europe, Japan and China. Hence India is sure to shine in the field even in the years to come. Moreover India produces about half a million engineers every year. Even though South America and South Africa have BPO skills and time zone advantage, the Indian companies have set their delivery centers there even. In the current downturn, there are many midsized technology services in US and Europe that can be acquired at relatively low prices.

Consolidation is the buzz in BPO sector

Indian BPO sector is swirling in consolidation waves as a result of fast changing industry dynamics. According to research analysts, consolidation will likely hit the business process outsourcing sector in the coming months. Some of the companies are already planning to move to different business lines since they face some bottlenecks to cope with changing dynamics. The $12 billion Indian BPO industry has been facing stiff competition from countries like Philippines, say analysts.

Recently, many of the domestic BPO companies have been broadening their service portfolios as part of their competitive strategies. Report suggests that BPO providers are aiming to differentiate services via broadening their service portfolios to provide end to end services. Also they are utilizing investments in technology for point solutions automation and business process utility services.

The process management sector is expected to see high growth as it offer good business opportunities along with cross selling scopes for domestic BPO entities. Moreover the sector is expected to be worth over a billion dollar in the coming years. According to analysts, the process management segment is expected to be worth about $1.7 billion by 2014. However, challenges like rising wages and increasing IT costs have been choking the BPO sector lately.

Business Process Outsourcing industry to glow in 2011

We have seen the growth of Indian BPO industries in the recent years. Even though the industry has matured from offering non core activities, there is a huge global market that is yet to be explored. Since the domestic and export sector in India constitute to 5% of worldwide technology products and services related spend of USD 1.5 trillion in 2009, the level of growth opportunity is distinctively high (myiris). Hence with innovative service models, the BPO industry in India can broaden its geographical reach and spectrum.

For widening their service offerings, BPO industry has adopted the inorganic growth route and thereby entering new geographical markets. Consolidation is taking a new dimension with many third party and captive BPO units acquiring small size companies to ramp up revenue, acquire clients and expand business segments and geographical reach. This trend is expected to continue in the near future mostly by the robustness of the Indian players.

Since BPO companies in India are focusing towards a market shift, they are changing their business from core markets like UK and US as these markets face a slow down owing to global recession. Indian companies have begun exploring markets like Australia, Netherlands, Philippines and Brazil. Even though these markets are just flourishing, they are expected to grow in future. Moreover by focusing on different regions, there are less market risks even.

Geographical shift is not confined to markets but even the delivery centers are moved toward rural areas in India. Due to lower cost of operation and growing real estate construction in rural areas, many companies are setting up their centers there. Furthermore they are also moving up the value chain in terms of service offerings from data management tasks to content creation and validation.

High performance in the retail industry through outsourcing

It is obviously the dramatic cost savings and the enhanced focus on core competencies facilitated by the BPO companies that attract the consumer goods and retail companies towards it. However any serious concerns related to outsourcing should address common concerns like the common belief that outsourcing entails a loss of in-house expertise. The argument goes that since the process is outsourced to an external service provider, there will be a reduction in process expertise and capability as a result.

 However companies with many years of experience in outsourcing have strongly voted against the belief by proving that gains rather than loses in functional expertise leading to higher business performance has been seen. Most of the retail companies operate in a competitive market where fluctuations are sudden, systems are complex, thin margins and handiness is mandatory. In such a scenario only a rare enterprise can stand against the tide and afford any loss even if it is only for a brief period. Hence companies prefer outsourcing to promote process excellence as it reduces costs.

Many companies who have partnered with the BPO companies have admitted that they have noticed significant levels of expertise equal to or often greater than those enjoyed prior to outsourcing. The impact of outsourcing on innovation, key skills, and access to cutting edge technology and tools for managing a process has been prominent and profitable. Many surveys conducted on this subject matter have produced results favorable to the BPO service providers. The bottom line is that most of the companies achieve high performance through effective outsourcing partnerships.

How to know the data confidentiality at outsourcing centers?

In the financial service industry many companies are skeptical about the security of their data while outsourcing. The uncertainty cannot be belittled since data confidentiality and security is of prime importance particularly for regulated entities in the financial service sector. Hence it becomes mandatory for the buyers of outsourcing services to closely examine the physical and information technology security, as well as data confidentiality processes maintained by the BPO companies.

The basic thing that comply the security and safety is infrastructure. Companies should look for secure and controlled data center environment with fire suppression, emergency power supply, cooling and building security. Also they need to know what all procedures need to be undergone by the personnel to enter the data centers. The place needs to have video surveillance that will be properly monitored. Moreover there should be no rights to privacy policy in place for processing sites and data centers.

Coming to the data security within the process, the companies should make sure that only authorized users have access to the data. Moreover the BPO Company should necessarily be certified and independently audited. The authenticity of the data confidentiality implied by the outsourcing service provider can be checked by knowing the measures used to secure data transfers between all related parties and also the presence of a secure processing environment.