Tuesday, January 29, 2008

KPO Industry in India

India is well known as a business process outsourcing hub. It has been leading the side for quite some time now and Bangalore, the software capital of India, went so far that people losing jobs by work being outsourced are called Bangalored. It is a mix of many different factors that made this happen - cheap, diligent and highly skilled workforce, investor friendly policies of Indian Government, Hospitable People and cheap real estate.

Now the same is being replicated in Knowledge Process Outsourcing industry. Indians are young, qualified, intelligent and hard-working but they are no longer so cheap. Neither the people nor the real estate is so cheap as compared to 5 years ago. This has made the resource intensive industry unfavorable giving way for KPO industry.

KPO jobs are better paid and as such they are high IQ too. KPO works can be categorized to two segments:

1. Decision Management or Vertical Solutions or Analytics

This is the area where companies like Global Analytics, Marketics, Fair Isaac, Fractal Analytics etc work. This generally covers areas like Market Segmentation, Predictive Analysis, Sales or Revenue Forecasting and are most common in Banking and Retail Industry.

The Decision Management industry is all set to become really big with many events happening. Some of the interesting events are -

- Inductis got acquired by EXL.

- Marketics was acquired by WNS.

- Fractal broke into two parts, and break away fraction has joined Adventity to start Adventity Analytics Consulting Team.

- Many new entrants have come up like Marketelligent, FifthC, Nettpositive, AbsoluteData etc.

2. MIS Reporting

EvalueServe, Adventity, Inductis etc are major players till now. But this area is a high growth area and many other players have entered this area. The potential of this area is because -

- without good MIS in place, there is little scope for Analytics.

- most of the indian companies are still in the phase building good MIS.

- MIS brings volume to the business.

KPO industry also include company’s own divisions for Business Intelligence. These are generally off-shored or near-shored or in-house. These do almost the same thing as the outsourcing companies do and generally have teams like:

- Analysis

- Business Consulting

- Modeling and Scoring

- Data Management

- Reporting

These teams have difference in functionality but the expertise requirement remains the same. It is very hard for one to master one area without the knowledge of other.

Mostly Banks have very strong internal analytics team while it still lacks in other industry verticals. The Retail biggies and the Telecom giants are now slowing moving towards having Analytics setup.

In Banking, ICICI, HDFC, Citi Bank, Standard Chartered, Barclays, HSBC etc have strong analytics team in India serving their operations globally. ICICI has centers in Mumbai, Hyderabad and Chennai, HSBC in Bangalore and Kolkata, and Citi Bank has centers in Chennai and Bangalore. These are the players having huge operations teams spread across various locations while others have one center each. Standard Chartered has in Bangalore and Barclays in Mumbai. The newest entrant among them is Barclays which has started analytics operations this year only.

While the India has huge potential of being a KPO hub, the problem is with the talent availability. There are few good universities which produces statistics graduates in the likes ISI, Presidency College, Delhi University, IGIDR etc. This has created huge vaccum for other graduates to move into this area and therefore like any other industries KPO is also dominated by the Engineers. Recent trend shows Engineers from IITs and NITs prefer to take an Analytics job than a Software job. This has given a boost to the overall KPO and Analytics Industry for now but this may be difficult to be taken as long term solution.

Overall future of KPO industry looks good but this can only happen if the short comings are addressed. Lets see how it goes further. If India becomes a KPO hub in line with BPO then India is going to be clear leader in overall ITes. I wont deny even overcoming United States.

(Originally published in Global Thougtz)


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sanjana said...

Well written article. Good insight about the KPO business. Thanks for writing this post, it has actually given answers for many questions about KPO's. I am looking forward for your next post.

Pranab Banerjee said...

Hi, I just wanted to confirm that you are indeed talking about AlphaData and not Absolutdata. I am not sure if any of the AlphaData companies is into Analytics, and if they are, if they are in India.
The blog is quite informative though. Nice piece...

sanjana said...

Hi, i was checking out more details about the KPO industry came across SiliconIndia, nice informative site, I would want you to check this site too. http://www.siliconindia.com/register.php?id=Kq7U13RE
Do let me know, your thoughts on this site.

Bhupendra said...

Thanks for the comments. I am sorry to be late for response. I somehow didnt get the email alert!!

Pranab, while writing the article I missed to include Absolute Data. I think, they are many others too.

Thanks for pointing it.

-- Bhupendra

Diwakar said...

Hi Bro,

This is the gr8 blog for the freshers who have less idea abt KPOs it answers many questions.

I felt great when i type few keyword on google abt analytics and ur blog appeared.......

Its a great hit bro....


John Frischenmeyer said...

Great article! Regarding the lack of talent in India...our firm is a premier provider of Advanced Analytics, Predictive Modeling & Statistical Analyses Professionals for customers across the US. We just recently began offering H1B sponsorship services for analytics/modeling candidates who typically struggle to remain in the US for the first post-grad year or two without the authorization. Many as well, we are not able to help, and would be very interested to partner with any company needing India-based talent to source and supply candidates needed there who have advanced quantitative degrees and analytics/modeling/analyses backgrounds.
Inquiries may be directed to: AnalyticsForIndia@ridgegarrett.com.

"Advanced Analytics, Predictive Modeling & Statsitical Analysis Professionals Group"

John Frischenmeyer
VP Technology Business Development
RidgeGarrett Associates
4100 Alpha Rd. Suite 900
Dallas, TX 75244-4325

niloo said...


srish said...

Very nice article. I have also read your article on Dataintelligence named as Analytics: Reality and Growing interest.I just wanted to have one clarification on market size of analytics... Is the source IDG's report"Worldwide Business Analytics Software Revenue 2008-2012 Forecast and 2007 Vendor Shares". Looking forward to your reply

KPO Companies said...

Going by the current statistics, the KPO wave is here to stay and Indians can now benefit much more than before. Large talent pools and favorable government policies together make India the most conducive environment for KPO. Several global players such as McKinsey, Reuters, Harris Interactive and Ipsos among others are already investing in India. As with the BPO sector, India is cost-effective and provides a vast intellectual talent with expertise in areas such as research and analysis.


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