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KNOWLEDGE PROCESS
OUTSOURCING (KPO)
Presentation Plan
Introduction to KPO Business
History of Outsourcing
Who and What is Outsourced
Location Attractiveness for KPO
Value Chain & Value Creation in KPO
KPO Business Models
Drivers, Inhibitors and Trends in KPO
Industry
Key KPO Players
Presentation Plan
Introduction to KPO Business
History of Outsourcing
Who and What is Outsourced
Location Attractiveness for KPO
Value Chain & Value Creation in KPO
KPO Business Models
Drivers, Inhibitors and Trends in KPO
Industry
Key KPO Players
India’s Service Sector Service Sector Revenue (USD Billion)
700
India’s service sector has grown
Revenue (USD
600
500
at 8.1% per annum between
Billion)
400
1993 and 2003 against 6.7 % 300
per annum between 1983 -1993 200 Revenue
100
0
The share of service sector in 1950 2000 2003 2006 2009E
GDP has increased from 28% in Period
the 1950s to almost 55% in
2006
Service Sector as a % of GDP
IT software and Outsourcing are
the chief contributors of the 100
booming service sector 80
% of GDP
60
India’s service sector accounted 40 2003
for 55% of the GDP in 2006 2009E
which is one of the highest in 20
the world 0
France
UK
US
Germany
Japan
Canada
China
Brazil
Malaysia
India
Phillipines
History of Outsourcing (1/2)
Year
KPO Revenue
Presentation Plan
Introduction to KPO Business
History of Outsourcing
Who and What is Outsourced
Location Attractiveness for KPO
Value Chain & Value Creation in KPO
KPO Business Models
Drivers, Inhibitors and Trends in KPO
Industry
Key KPO Players
Who is Outsourcing?
Banks
Asset Mgmt
Consultants
Firms
KPO Services
Research
Industries
Firms
resulting in high 15
export of BPO/KPO 10
services are
Exports
Contribution
50
Competent
to Indian
40
KPO
% 30
20
Management of Data 10
0
Government Support
Segments in KPO Industry and
Potential
8%
9%
29%
12%
Data Search, Integration and Management would include Business, Market, Investment Research,
etc.
It is the largest segment growing at a CAGR of >50% YOY
Biotech and Pharma segment would include contract research outsourcing and clinical trial research
which is cheaper in India
Engineering & Design activities are specifically for manufacturing firms, e.g. Auto companies are
outsourcing their idea generation and implementation activities to players in India
Development of animation games are being outsourced to players in India
A new wave – PEOPLE TO PEOPLE OUTSOURCING
Presentation Plan
Introduction to KPO Business
History of Outsourcing
Who and What is Outsourced
Location Attractiveness for KPO
Value Chain & Value Creation in KPO
KPO Business Models
Drivers, Inhibitors and Trends in KPO
Industry
Key KPO Players
Location Attractiveness
Location Attractiveness
India & China – Battling Giants
India has low wages, pool of skilled talent, favourable tax structure. English language
skills is a big advantage
China trails India in BPO experience and advantage. It has cost advantage and large
educated population. Outsourcing from Japan and Korea is picking up.
Both China and India score low on political and economic risk and weak infrastructure
Data Integration
Data Search Recommendation
and Analysis
•Consulting Companies
•Research Firms
•PR Firms
KPO Players can execute •Companies in various sectors like
this portion of the value •Telecom
chain, e.g. Go to Market •Retail
Strategy •Media
•Energy
Value Chain in KPO (2/2)
Financial Services Value Chain
•Investment Banks
•Merchant Banks
KPO Players can execute •Private Equity
this portion of the value •Hedge funds
chain, e.g. Target Acquisition by a •Mutual Funds
Bank or Private Equity Player •HNI
KPO – Value Proposition
KPO Services help 100%
70%
Reduce Design to
market lead time 60%
20 Value Creation
Profit
Provide research on 50% 60 Variable Cost
effectiveness in 10% 20 18
business 0%
2010.
Number of jobs in KPO industry would increase from
Hybrid Model
Companies outsource their
work to Third party as well as
their own KPO
This model is usually used to
Make or Buy? – Developments Similar
to IT Outsourcing
2015 KPO vendors
surpass
captives and
address SME
Market
2010 Globalization Indian
and vendors
Specializatio surpass
n of Vendors captives
2005 Rise of KPO Expansion of
Vendors Indian
Vendors
2000
Early KPO Rise of
Captive set Indian
up Vendors in
IT
1995
1990
1985 Arrival of IT
western
captives
Phase I Phase II Phase III Phase IV
Make or Buy
Shift has been observed towards vendor model due to
following reasons:
Faster initial set-up
More Flexibility
Better Control
IT & Compliance
Presentation Plan
Introduction to KPO Business
History of Outsourcing
Who and What is Outsourced
Location Attractiveness for KPO
Value Chain & Value Creation in KPO
KPO Business Models
Drivers, Inhibitors and Trends in KPO
Industry
Key KPO Players
Drivers for KPO
Shortage of talent in developed countries
Tighter emigration laws make offshoring of
these services a viable solution
In order to remain competitive companies
need to:
Cut cost
Reduce time to market for their services and
products
Economies of scope generated by entry of
many IT players in KPO domain
BPO companies moving up the value chain
Availability of all types of services through a
single vendor
Inhibitors for KPO
Talent Crunch
Though 3 million students graduate from
GM (Automotive) Pangea3
Key Players in KPO Sector
Company Employees Centres in India Services