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India to retain lead in global KPO sweepstakes

India will remain the market leader in the global knowledge process outsourcing industry even though many smaller destinations will create niches of their own, reports Suman Layak.

india Updated: Feb 13, 2008 22:29 IST

India would remain the market leader in the global knowledge process outsourcing (KPO) industry even though many smaller destinations will create niches of their own. The industry is likely to grow to anywhere between $10-17 billion by 2010, according to a report on the industry released by global consulting firm KPMG.

India currently leads the KPO sector globally, accounting for around 70 per cent of revenues. However, many new locations like Estonia and Wales are springing up to create niches and attracting work for themselves.

Edge Zarrella, KPMG's global head for IT-advisory, said: "None of these countries are a threat to India because India has the numbers. If any company wants to scale up they will have to do it from India."

Zarrella explained that with 32 per cent of India's population being below 15, it is only in this country that abundant manpower is available for this kind of an industry. None of the other places that are trying to build a KPO niche has such a huge young population. "In my country Australia it is only 15 per cent. There is no way we can threaten India," he said.

He said that India needs to understand that KPO is about knowledge and Indian firms will have to build their knowledge base. "These are premium dollars. People will pay only if you have the knowledge and wisdom that they do not have in their companies. It is not a costs game, it is a knowledge game."

Pradeep Udhas, head for global sourcing advisory at KPMG, said: "The salaries in India now allow us a 10-15 years of free way to use the cost benefits to our advantage. However, there needs to be an understanding of what is needed by the companies."

The other point is that a lot of hub-and-spoke kind of development is likely in this industry and India can become a hub for a lot of countries in the region like Sri Lanka, Vietnam or even Pakistan.