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Today, you will read General Awareness Topic:
"KPO Industry in India"
Outsourcing refers to a business restructuring or changes in current business practice that shifts operations or processes previously performed within the company to an outside entity—an independent third party. One result of outsourcing is that the locus of work shifts, and associated jobs migrate, outside the company. For both firms and the Government, outsourcing or “contracting out” shifts jobs among employers, but does not necessarily reduce the number of jobs. Knowledge Process Outsourcing (KPO) is a higher-end version of outsourcing of business processes that require significant domain expertise. With the evolution and maturity of companies’ outsourcing strategies, businesses are moving towards outsourcing high-end processes such as legal processes, market research and analytics, engineering processes, design and product development. Such off shoring of high-end knowledge intensive work is termed as KPO.
India has become one of the most sought after destination for the companies wanting to outsource their business, knowledge, research, legal and related high-end processes. This not only boosts exports, increases national income and creates greater employment avenues, but also increases tax revenues, caters to the growth of other related industries like infrastructure, catering, etc. The companies involved in outsourcing activities tends to earn huge profits out of this and thus, are in a position to offer their employees the good and competitive pay packages, along with many attractive employee benefits. Companies outsourcing work to a KPO vendor can help save costs up to 32 per cent on revenues, assuming that the profit margin remains constant.
The Indian KPO services industry is estimated to be around USD5.7 billion currently and grew by 15-17% in the recent past. The Indian KPO providers offer a range of solutions to diverse industry segments such as FMCG, engineering, automobile, telecom, R&D, banking and financial services, insurance, etc. In the coming years, the volume and complexity of work being outsourced to the Indian KPOs is expected to increase tremendously, due to the competitive advantages mentioned. Analysts put cost advantage, as one of the most significant drivers of KPO business. Another critical driver is the prevailing shortage of skilled human resources in developed countries, like the USA and EU.
India has a large pool of knowledge workers in various sectors ranging from Pharmacy, Medicine, Law, Biotechnology, Education & Training, Engineering, Analytics, Design & Animation, Research & Development, Paralegal Content and even Intelligence services.
Cost savings, operational efficiencies, access to a highly talented workforce and improved quality are all underlying expectations in off shoring high-end processes to India. India’s intellectual potential is the key factor for India being the favored destination for K.P.O industry.
Moreover, life sciences companies are facing major challenge due to the growing cost of R&D and, as a result, a growing number of pharma companies are turning to outsourcing and off-shoring as ways of reducing these costs.
This market is expected to grow significantly during the next few years, with a notable increase in demand coming from the US as a result of the recent reforms in healthcare regulations.
However, today, the Indian KPO industry faces the challenge of adequate talent availability and high attrition rate among young professionals. Further, services in this sector are specialized and professionals with specific domain knowledge are only preferred.
A higher education degree and an experience within the sector most often becomes a prerequisite to getting employed with a KPO company. However, these knowledge professionals often lack the inclination towards continuous learning and understanding of the dynamic nature of this profession.
Furthermore, continuous training of business-related skills is essential in the outsourcing services sector. This is because, unlike the BPO industry, which is process oriented, the KPO market demands professionals with decision making, problem solving and analytical skills.
During the recent economic crisis, all the industries across the globe felt the pinch on their revenues, forcing them to cut down their costs. The situation was further fuelled by the growing political pressure, driven by the ever increasing unemployment in developed countries. This had a huge impact on the Indian outsourcing sector.
Some other challenges faced within the Indian KPO sector is the continuously improving quality standards, further investment towards the KPO infrastructure, requirements of higher level of control, confidentiality and enhanced risk management.
With its firepower of engineers, chartered accountants, doctors, MBAs, lawyers, research analysts, scientific researchers and PhDs, India is well positioned to address the global KPO need. In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO), etc..
KPO industry is having a bright future in India; there is still need to address many issues and challenges which restricts the healthy development of this industry. Efforts should be made to give appropriate training to employees of this industry as well as to develop a sound and healthy environment which do not have much detrimental effect on lifestyle of employees. More over education system should be transformed to cater to the needs of the industry.