Released on = July 17, 2007, 8:05 am

Press Release Author = prcc

Industry = Small Business

Press Release Summary = An Evalueserve report released today predicts that the
Knowledge Process Offshoring world-wide is expected to grow to US $ 16.7 billion in
revenue by 2010-2011 implying an annual growth rate of 39 percent and it will employ
approximately 350,000 professionals by March 2011. Furthermore, the Knowledge
Process Offshoring industry in India is expected to grow to US $11.2 billion in
revenue by 2010-2011 and will employ approximately 255,000 professionals by March
2011.

Press Release Body = The report titled "India's Knowledge Process Outsourcing (KPO)
Sector: Origin, Current State, and Future Directions" by Alok Aggarwal, Chairman,
Evalueserve is an updated version of a similar report done by Evalueserve in July
2004, and analyzes the changes the KPO sector has seen during the last three years
and what it is likely to see during the next four.
According to Dr. Aggarwal, "The main reasons for this huge growth in the KPO sector
is the vast pool of educated and experienced professionals in countries like India,
China, Russia, Poland, the Philippines, Hungary and many republics from the
erstwhile Soviet Union. Evalueserve sees these countries to eventually emerge as
strong contenders in the KPO business. In fact, in the near future, KPO is likely to
be driven by factors like breadth and depth of coverage, domain expertise, location
advantage (e.g., near-shoring and language capabilities), sales and marketing
capabilities, data compliance with respect to regulatory standards (especially those
defined by the United States, Canada and the European Union) and the management of
business risks. Therefore it is quite likely that companies - both with their own
captives and those using third party vendors -may use a "hub and spoke" model in
which a provider in India may constitute the "center" whereas other units in the
world may provide appropriate "spokes."
According to Evalueserve's research, the KPO industry in India had only 9,000
billable professionals in India that generated revenue of US $ 260 million during
2000-01 and this number has already grown to 75,400 by 2006-07. These billable
professionals generated US $ 3.05 billion, thereby growing annually at 51 percent in
US Dollars and 43 percent in terms of billable professionals over the past six
years; this growth is pretty much in line with the predictions that Evalueserve had
made in July 2004.
The current forecasts by Evalueserve for the KPO industry for the next four years
(of $11.2 billion in revenue and employing an average of 255,000 professionals
during 2010-11) imply a cumulative annual growth rate of 38 percent in revenue and
36 percent in the number of billable professionals. However, some of the following
assumptions have been made while creating these forecasts; if these assumptions do
not hold, and in particular, if the attrition is not controlled properly then this
growth within the KPO industry may be stymied even further, which may be able to
generate no more than US $9.9 billion in revenue (and employ no more than 225, 00
professionals) during 2010-11:
. The lack of availability of highly educated professionals (e.g., MBA's, Chartered
Accountants, Medical Doctors and Architects) in India and other low-wage countries
may affect the growth of the KPO sector.
. Small and Medium Enterprises (SMEs) are likely to be the major growth drivers for
the KPO sector. According to Evalueserve, out of the 10 million SMEs in US and
Europe, about 10 percent (i.e., approximately 1 million) can benefit from KPO
services due to reduced complexity, ability to compete effectively with small and
large competitors, shorter time to market, higher flexibility, overall lower costs
and potentially higher quality for the same costs.
. The appreciation of Indian Rupee especially when compared to the US Dollar is
gradually making Indian KPO companies less competitive.
. Finally, because of attrition and rising costs in India, companies with their
captive centers in India are also beginning to outsource some of their work with
third party vendors that can provide complementary skills and also handle "spikes"
in the workload. During the next 4-5 years, this trend is likely to accelerate,
which would imply that these companies would move from a fixed cost model to a
variable cost model and hence start working with several vendors in several low-cost
countries and which would also imply that these companies will gradually move from
having their captive units to third party vendors providing them these services.
The Evalueserve report also delves deeper into a few sub-sectors within the KPO
industry that are expected to do well e.g., banking, finance, securities and
insurance research; data mining and analytics; and contract research organizations &
biotech services and some that are still in a nascent stage, e.g., legal and
paralegal support services; remote logistic services and procurement support
services; and network optimization & analytics services.


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