| KPO has developed two years back to encircle | | | | material. |
| several specialist areas that were initially forbidden for | | | | Because of the significant hype, industry will now need |
| offshoring. Take for instance, it has develop a legal | | | | to take significant initiatives to cope up with the |
| outsourcing firm which employ lawyers; a pharma | | | | shortage of quality supply of professionals and have to |
| R&D outsourcing company which recruits doctors, | | | | ensure strong training methodologies for their recruits |
| PhDs in life sciences and an auto engineering | | | | too. |
| outsourcing firm which requires engineers with CAD | | | | Issues of upgrading data security and patent |
| CAM expertise. | | | | infringement are need to be addressed more |
| According to a Confederation of Indian Industry (CII) | | | | proactively, when you are doing more complex jobs |
| study, KPO will grow at a compounded annual growth | | | | as billing rates also get higher simultaneously. The onus |
| rate of 46% to be worth $17 billion by 2010, of which | | | | lies on the industry to yield weighs even more heavily |
| $12 billion will be outsourced to India. NASSCOM | | | | as there is positive buildup and expectations from India |
| projects that the KPO sector in India may reach $15.5 | | | | in the KPO space. |
| billion by 2010, up from $1.2 billion currently. | | | | Entrance in KPO is not a deal, but to survive and |
| India, however, remains the proven and favored | | | | emerge as a winner will set apart the stronger players |
| destination, way ahead of other competitors in most | | | | in the long run. For every single large KPO player, there |
| areas, especially financial research, legal and | | | | are estimated 10 small players offering similar services |
| healthcare/pharma research. | | | | generally at lower billing rates. We are looking forward |
| The reasons that usually influence buyers' decisions | | | | for the wave of consolidation in the industry between |
| regarding choice of destination are: | | | | 2006 and 2008. |
| - Availability of qualified manpower | | | | High degrees of specialization and innumerable niches |
| - Political stability | | | | will let even relatively small firms to persist profitably |
| - Infrastructure | | | | and create a large pool of acquisition targets. So, even |
| - IPR/Data security issues | | | | as consolidation picks up the pace, the explosion of |
| - Communication skills | | | | new service providers will create further |
| - Lower wages | | | | fragmentation. |
| - Proven delivery capabilities | | | | Bottomline: More than consolidation, fragmentation will |
| If you are curious to gather these benefits of | | | | become a stronger wave among the KPOs, leaving |
| outsourcing but not possessing gusty willingness to | | | | the industry with even more players by 2010. Hence, |
| take the calculated risk, go for the option of captive | | | | the adequate availability of these small vendors as |
| route as it will enable you to protect yourself against | | | | acquisition targets will lower the valuations. |
| possible IPR threats and feared loss of patented | | | | |