KPO industry to touch $16b by 2010
Kolkata: The size of knowledge process outsourcing (KPO) industry, the high-end services entailed in business process outsourcing (BPO) activities, has the potential to touch $16 billion by 2010 across the globe.
In a study carried out by Baring Private Equity Partners (India) Limited, a leading venture capital financing firm, it was found that KPO industry has the potential to attract maximum venture capital (VC) financing in India since by definition, such activities were knowledge-driven and not capital intensive.
The Baring report said that it was expected that financing of merger and acquisition (M&A) activity would be the major uses of venture capital in KPO.
Comparing between KPO and BPO, the study found that revenue per hour in the former was $8-11 per hour, while it was $22 in the case of the latter.
Capital expenditure per seat in both the activities was more or less the same at $6000 to $8000.
The study said that higher revenue and better profit per seat would make KPO a compelling investment proposition.
The major KPO activities were financial analysis and equity research, market research, risk management, data mining, business research, R&D outsourcing, animation and simulation.
Zeroing in on the locations, which were attractive for KPO activities, the Baring report said that Mumbai would be an ideal place for financial analytics, while Kolkata, Gurgaon and Bangalore would provide decent living conditions.
While Gurgaon and Kolkata were once again ideal for space economy and connectivity, places like Noida and Hyderabad were attractive for good infrastructure. In this context, the report said that Eastern India was a natural choice for KPO activities since Kolkata had a large pool of educated and skilled people with good English communication skills.
The takers for KPO would be investment banks, industry associations, consulting firms and corporate planning departments of large multinational corporations.
As per Nasscom estimates, the KPO industry was expected to grow by 45 per cent by 2010.
Out of the $16 billion, which the KPO industry was likely to assume by 2010; around $12 billion would be outsourced from India.