Indian KPO industry: Jobs in the making

Wednesday, 11 August 2010

NASSCOM estimates the global KPO industry to reach $17 billion by 2010. With over 70% of this being outsourced to India and employee strength expected to grow from around 80,000 - 1,00,000 in 2005 to 250,000 by the end of 2010, India is emerging as a top KPO destination.

The talent pool for the growth of KPO needs to be specialized and equipped with skill-sets unique to a particular vertical. Apart from basic skills like good communication skills and command on English language, a typical KPO employee needs to be professionally qualified, have domain knowledge, and the ability to work with various tools and software. Banking and finance, legal, pharmaceutical, engineering, e-learning services are some of the emerging knowledge intensive sectors driving the growth of KPO services.

How lucrative is a career in KPO?

A recent Kelly Services Salary survey echoes the sentiment that ’KPO has emerged as one of the leading hiring industries’, but just how lucrative is it to the average employee? Industry studies and estimates suggest that

Salaries in Indian KPO’s are 25-40% more than those in Eastern Europe, Indonesia and other offshoring destinations
Average Indian KPO salaries are around $5,000-$9,000 per annum, for entry level to mid range executives
With increase in complexity and skills for KPO jobs, the trend is to employ specialised workforce including CAs, engineers, lawyers, doctors, and other domain experts
Salaries in KPOs for these domain experts are 25-40% higher than in traditional avenues (for professionals like lawyers or finance experts)

Offshoring generally results in a 15-30% cost advantage to buyers. The 2008-2009 financial crisis increased opportunities for the KPO industry as a whole as cost cutting came into even greater focus. However in real terms the industry experienced a mild slowdown as margins were tightened and pressures from external market conditions increased. This has had an obvious impact on salary growth in the last couple of years.

Recruiting and retaining, the ‘right’ employee

The key challenge for the KPO industry remains shortage of skilled supply. India’s growing pool of talented resources and its propensity to lower total costs in the industry lead to highly competitive billing rates which goes on to attract offshore buyers -thus fuelling demand and creating more jobs in the market.

Attrition continues to be one of the challenges, apart from competing demand from other sectors due to supply side restrains. Besides, there is the question of low employability of the workforce pool. As Ashish Sinha, COO of Rocsearch mentions in Rocsearch study on the sector; of the 84,000 odd Tier 2 B-School graduates only half are employable. Moreover, just 2 out of every 100 are likely to choose to work in the (KPO) space. With training of new recruits being a major cost of companies, they are using higher salaries among other retention strategies.

Growth in Knowledge Services ‘support’

As per World Bank statistics, India ranks relatively lower on the World’s Knowledge Economy Index and is placed behind several developing economies including Indonesia, Turkey, Latin American countries, China, and Poland. It is also way behind Korea and Western European countries, the US, Canada and Japan who are typically buyers of TES/BPO/KPO services.

The outlook for the Indian KPO space is a positive for this decade and the next half, with estimated revenue growth and increasing demand for specialized workforce, it is a three dimensional win for employers, employees and buyers of services. For the KPO to register a comprehensive growth, associations, education institutions and service providers need to put in greater efforts. These efforts should address the knowledge and information gap and spread awareness among job seekers.

Next >

[ Back ]