Future Outsourcing Trends
Published On :27 April,2009
As the world economy opens up, there can be seen many revolutionary trends in the global business market. Countries across the globe are becoming increasingly aware of the presence and opportunities of other countries around them. The western world is waking up to realize the potential of the so called third world countries that provide quality services at lower rates. At the same time, the developing countries are making the most of the outsourcing boom and expanding its reach far within. The KPO or the Knowledge Process Outsourcing is the latest buzzword and the countries are capitalizing on their resources and spreading them across smaller cities and towns.
This article attempts to illustrate some of the rising trends in the outsourcing industry witnessed by the global business scenario.
Need of Professionals
The KPO industry in India is predicted to cross $15.5 billion mark by 2010. This would mean a growth rate of 40 to 50 percent for the industry for the next five years.
This growth would demand a quantum increase in the workforce of KPO services industry. After all, if the KPO industry is set to move up by a whopping figure, there will be a demand for professionals to counter the upswing. The KPO jobs in the coming decades will be characterized by higher compensations than the BPO and high end work requirements.
There will be increased demand for professionals like chartered accountants, doctors, lawyers and engineers
Consolidation and fragmentation of outsourcing fields in KPO
With KPO emerging as the new concept of the business verticals, there will be many service providers plunging in to cash in the growing demand. Professionals like lawyers, engineers, doctors and chartered accountants may emerge as new age entrepreneurs in the outsourcing business to make the most of the plethora of opportunities laid before them. The emergence of “KPO” will see a proliferation and entry of new service providers in the arena of the industry. “The emerging opportunities in knowledge services are attracting a new breed of entrepreneurs, absolutely professionals like lawyers, chartered accountants, doctors, engineers, scientists, etc. into the outsourcing business.
A KPO set up involves only minimal entry requirements and low infrastructural costs, thus many companies will be branching out to include a KPO wing within their premises. KPO demands a high degree of specialization that allows even small firms with necessary technical expertise to function smoothly
New areas joining the outsourcing business
India is the preferred destination for outsourcing companies. But within the country, the service providers are concentrated in the metro cities of NCR Delhi, Mumbai, Hyderabad, Bangalore, Pune and Chennai. But to divide this industry boom to all parts of the country, the government is making attempts to drive the KPO buss inwards by raising wage costs and offering attractive benefits in the smaller states.
Many of the state governments in association with STPI India are developing IT andsoftware parks with complete infrastructure that would prompt companies to move to smaller cities within the states of Punjab, Rajasthan and Kerala.
Expansion of offshore centers
Major MNCs of the world are waking up to the benefits of offshoring business processes and it turn hastening the process of spreading the offshore presence.
The major chunk of this is towards fully owned captives, driven by two factors: first, the increasing sensitivity towards data security, IPR, and confidentiality; that make captives center to be the most preferred choice. Moreover, many large companies interacting with offshore clients established their captive centers in India. And keeping in mind the changing forces and dynamics of the industry, the trend will only increase from here. However, after a certain size, the economics of captive offshore centers becomes unfavorable as compared to contracting and outsourcing to third-party vendors; and many corporations will prefer this route as they expand in India.
Increase in Acquisitions and mergers
In the coming times, the acquisition and merger activities are expected to be much higher than what it already is. The consolation is however the fact that a large number of small deals will also flourish alongside the mega deals that take place. This will be the cause of acquisitions in the knowledge services domain, where acquirers will find it profitable to enter into small deals to acquire domain knowledge, new clients and position themselves in this small, but fast growing segment.
Indian IT companies have been making major investments in both the BPO and Knowledge Process Outsourcing (KPO) industry and Systems integrators and IT companies formed the maximum percentage of acquirers. Theses acquisitions are an easy way to acquire domain specific capabilities.
In the coming years, KPO is expected to become the prime target area for acquisitions.
Michael Henderson is a reputed KPO professional and has been associated with many KPO outsourcing firms. His career graph boasts of many successful projects that he has completed for clients from world over. He is an expert when it comes to KPO processes including database cleansing & data entry, e-mail list building and a host of other internet research services.
