WNS, the first Indian listed BPO recently announced acquisition of the knowledge process outsourcing company – Marketics Technologies. The deal is valued at $30 million cash and about $35 million will be paid additionally over the next 12 months. The completion of deal is expected over next 90 days.

With the deal, WNS will be able to deliver marketing analytics services to companies in diverse verticals such as consumer goods, financial services, media and entertainment, medical devices and pharmaceuticals, retail and travel. Marketics was providing services to analyze and integrate customer-marketing data across US and Europe. It is a 4-year old company with about 230 employees based in Bangalore and Coimbatore. This service segment is relatively new with very few competitors and WNS being an early bird, will benefit.

In July 2006, another large BPO firm, EXL Service Holdings had acquired Inductis, a smaller research and analytics firm. Inductis was offering services in primarily in the financial and insurance verticals. This was a strategic move on the part of EXL to strengthen its services in the segment. Inductis with a team of about 250 people was undertaking projects related to client acquisition, risk reductions, fraud detection and cost optimisation.

These deals indicate the growth trend in the research and analytics segment of KPO in India. People working in this segment need to possess high-end skills with Masters and Doctorates in their respective streams. People with similar qualifications in the US demand very high wages therefore these services are offshored. India becomes the obvious choice, as it offers both –qualified, skilled workforce and lower wages. With savings of about 50-60%, the effect on profitability is great.

The various services that are being offered as part of research and analytics include – investment research, business research, market research, data and financial analytics and intellectual property research, R&D in biotech and pharmaceutical verticals, content writers, engineering design, business intelligence, etc. These services usually need professionals with thorough understanding of their respective fields. The advent of research outsourcing has opened up new employment opportunities for MBAs, Masters in Economics & Statistics, journalists, lawyers, engineers, doctors, scientists, etc.

With KPO being the latest buzzword, more and more successful BPO companies are looking to move up the value chain. The demand for non-voice-based tasks is also growing. It is also easier for successful BPOs to venture into these services, as clients are willing to extend their partnerships and experiment. Clients who have had successful BPO offshoring experiences in India are open to outsource the value-added services to take advantage of the skill sets and lower wages.

The other factor that is expected to work in the favor of the sector is that these services are not volume centric. Even smaller firms that may not have the capability to scale up in terms of number of employees can operate successfully leveraging on the expertise that they can offer to clients.

The Indian outsourcing market is making the most of immense opportunity given the billing rates are higher, the confidence of the clients and the availability of resources. The KPO industry is India is estimated to go up to $25 billion by 2010 and research and analytics at 17 billion is expected to constitutes about 65% of the total KPO. With these huge numbers the market will further face shortage of skilled manpower. However, for India to be able to exploit the opportunity, it needs a concerted effort on the part of the education institutes and the outsourcing industry.

ValueNotes Outsourcing Watch: Insights for Investors is a unique news and analysis service from the ValueNotes Outsourcing Practice, focused entirely on outsourcing; This weekly publication analyses events in outsourcing, outsourcing companies, trends in the sector, impact of global competition from offshoring to established US companies, and emerging investment opportunities.

No responsibility is accepted for errors of fact or opinion. Neither the analyst nor ValueNotes has a position in the stocks covered above, or has received any payment in any form for this report. ValueNotes does not own or trade in the stocks of companies under coverage. ValueNotes does not provide investment banking services or investor relations' services to preserve the independence of its research. Neither ValueNotes nor the analyst incurs any liability arising out of use of the above information/ report. Reproduction in whole or in part without written permission is prohibited.

ValueNotes Outsourcing Watch articles are distributed through FinancialWire, an independent, proprietary news service of Investrend Information, www.investrend.com

Related Items:

1. The CoE wave in global sourcing
2. Research and Analytics offshoring – gathering steam
3. Building on Multi-lingual Capabilities
4. UK Outsourcing to Intensify!
5. Subprime woes - Will it rock the Indian BPO market?