Talent Crunch May Eat into India’s KPO Pie

The growth of knowledge services business in India will be determined more by the size of available labour force than the dynamics of business demand, according to a study by UK-based research services company RocSearch.

With relatively low labour costs, skilled professionals proficient in English and software skills, there is a high probability of India cornering a sizeable chunk (around $5 billion) of the estimated $17-billion knowledge process outsourcing (KPO) industry by 2010-11.

“But knowledge services players have been finding it increasingly difficult to get the right talent, especially at the middle-management level. This talent crunch is becoming pronounced in spite of an annual addition of over 3 million graduates and professional degree and diploma holders to the existing talent reservoir of over 100 million,” it said.

Every year, around 950 business schools in India produce about 90,000 MBA degree holders, compared with 13,500 in the UK. Over 4,50,000 engineering graduates and 1,500 PhDs are added to the country’s workforce every year. About 55,000 masters in computer applications and around 25,000 pharmacists graduate annually.

Only China and Russia come close to India in terms of number of professionals. But in spite of the impressive number of the qualified professionals that the country produces every year, the available pool of usable talent is smaller than the total labour supply, the study said.

Further, jobs in India are growing faster than the workforce, with off-farm jobs rising 2.5% a year between 1998 and 2005, whereas the labour force grew only 2%.

Currently, under 0.1% of the total number of people employed in the public and private sectors are engaged in KPO jobs. Only a few Indian KPOs have over 1,000 employees in their rolls today. The study estimates the total number of people working in this industry would not be more than 1,00,000 by 2010.

“A burgeoning manpower-supply gap, therefore, is likely to limit India’s ability to take advantage of a knowledge services boom,” it concluded.

Source from: Financialexpress.com

Financial services KPO to touch $5 bn

The financial services knowledge process outsourcing (KPO) industry is expected to be worth $5 billion by 2010, said a KPMG study.

KPMG’s view was revealed in a report launched at the Nasscom India Leadership Forum 2008 in Mumbai today. Edge Zarrella, global partner-in-charge, IT advisory, KPMG, said: “Our study looks at the financial services KPO space which is driving the KPO evolution.”

While organizations are trying to master Information Technology Outsourcing (ITO) and BPO strategies, they are now faced with a new industry trend: KPO.

Pradeep Udhas, global partner-in-charge, sourcing advisory, KPMG, said, “Cost savings, operational efficiencies, access to talented workforce and improved quality are driving offshoring of high-end knowledge-based processes.”

India is expected to remain a preferred location for KPOs. However, organizations may look at other locations for additional delivery centers. Canada and Australia have the power to support the KPO industry. China, South Africa, and Singapore are other possible locations.

Issues that can hamper the growth include skill shortage and the declining US dollar.

Source from Business-Standard.com