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Sunday, May 15, 2005

Knowledge Process Outsourcing : Destination India

India is all set to move from being the most preferred business process outsourcing (BPO) destination to a knowledge process outsourcing (KPO) destination. A paper prepared by the Confederation of Indian Industry (CII) reveals that KPO would grow at 46% to reach a staggering US$ 17 billion by 2010. India’s transition from being a BPO destination to a KPO destination is imminent. The CII paper "India in the New Knowledge Economy", lists areas with significant potential for KPO include pharmaceuticals, biotechnology, and ICT, besides legal support, intellectual property research and design and development for automotive and aerospace industries. India stands to gain from its inherent strengths in the healthcare sector, pharmaceutical and biotech sector and ICT sector. India could emerge as a global KPO hub as the business requires specialized knowledge in respective verticals and the country's large number of engineering and technical institutes are geared to address the manpower demand. In seven years from now, the healthcare sector could account for 7%-8% of the nation's GDP and provide direct and indirect employment to around 9 million people; this sector is the largest service industry in terms of revenue and the second largest after education in terms of employment. India has a proven healthcare system with over 60,000 cardiac surgeries done per year that matches international standards. Multi-organ transplants like renal, liver, heart, bone marrow transplants are successfully performed at one-tenth the cost, and patients from over 55 countries come to India for treatment. The Indian pharmaceutical industry too has practically achieved self-sufficiency and global recognition as a low cost producer of high-quality bulk drugs and formulations. Indian companies now offer custom synthesis services at 30% to 50% cost savings compared to global costs, and with clinical trials costing about US$ 25 million as compared to US$ 300 to US$ 350 million, Indian option looks attractive. The Indian biotechnology sector too is now on an upswing and with the country’s excellent network of research laboratories, well-developed base industries, rich bio-diversity, extensive clinical trial opportunities and trained manpower and knowledge base, makes it an automatic base for KPO. The Indian IT sector too could strike it rich in a new breed of high-end knowledge-based outsourcing as global corporations are moving process like data and intellectual property researches to offshore locations and more specifically to India. Sometime back I wrote,Every form of digital data – creation, transformation and reporting is up for grabs in the offshoring world. The CII position very much confirms our earlier coverage about this imminent development, here and Eric Keller was indeed right when he wrote, took Japan more than 30 years to obtain a strong position in key U.S. industries, such as Automotive and Consumer Electronics and that It will take half as long for India to do the same for service-oriented industries with IT leading the charge.

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