KPO booming, but attrition major concern

Written by Vrishti Beniwal | New Delhi, Sep 21 | Updated: Sep 22 2007, 04:55am hrs
India may become home to 65% of the knowledge processing outsourcing (KPO) professionals in the world by 2011. However, if attrition continues unabated, other low-cost destinations such as China, the Philippines, Poland and Russia might get a larger share of the global KPO market in a few years.

Compared with the $4.4-billion global KPO industry that employs 1,06,000 people, KPO in India is a $3.05-billion industry employing 75,400 people. A study by Evalueserve predicts it will grow to $11.2 billion to employ 2,55,000 professionals by 2011, against the global industry, expected to grow to $16.7 billion, employing 3,50,000 professionals.

But, if the attrition is not controlled properly in the KPO sector in India, the industry may not be able to generate more than $9.9 billion in revenue (or employ more than 2,25,000 professionals by 2010-11. It would not be surprising if attrition alone could become the biggest problem for the Indian KPO sector within the next 2-3 years, says Alok Aggarwal, chairman and co-founder, Evalueserve.

Unlike BPOs, where skills are taught in a few days and the work is process-oriented, repeatable, scalable and does not require the worker to be near the client, KPOs require professionals who have an in-depth knowledge, experience and judgment skills in their domains. Job-hopping leads to reduced productivity and leaves very little room for new learning and higher compensation in the long run, the study says.

The study also predicts the fastest growth in the number of professionals in data management, searching and analytics sector, which is expected to generate revenues worth $2,500 million and employ about 60,000 professionals in 2010-11. This will be closely followed by contract research, biotech and pharmaceutical services sector, expected to generate $2,500 million in revenue and employ 50,000 people by 2010-11.

In 2000-01, the Indian KPO industry had 9,000 billable professionals, who generated total revenue of only $260 million during the period.