Wednesday, December 5

Want a 500% salary hike? Join a KPO

Time: 2 am.

Place: A swank stained-glass building in Gurgaon

Young lawyers and pharma grads, all smartly dressed are huddled together in a colourful bay on the second floor. A new drug patent in the US has to be filed within three days. The group has to do research, file the documents and send it to its headquarters in California within the next two days.

The third floor is buzzing with hectic activity. Fresh automobile engineering grads are leaning on their desks. They are sketching designs for a Fortune 500 car major. The pace of their hands quickens as the deadline approaches nearer.

One can hear all sorts of noises from the ground floor. It houses a swank call centre. Young college grads are handling calls, speaking in a range of global accents, trying to calm down tempers of customers who’ve had hard disk failures or mistaken the CD-drive for a cup-holder! Many are thinking of the time they will graduate to the third floor. Not only are the upper floors more hip and happening, but some of their friends there earn five times of what they get.

A widening gap

Welcome to the world of knowledge process outsourcing, where KPO agents earn 46 per cent more than BPO executives. Whereas, an Indian BPO exec earns about $6,000 a year, his KPO friend is sure to earn anywhere above $8,800 – a huge 46 per cent difference. The figures were released in a recent survey on the KPO sector by Evalueserve.

The salary gap is not limited to BPO versus KPO. Whereas, a fresh MBBS or lawyer earns Rs 1.5 lakh annually, a KPO offers much more, almost 500 per cent more!

Says Rohit Dogra, assistant vice-president, analytics at Evalueserve: “Fresh doctors and lawyers take home a cool Rs 6-8 lakh salary package at KPOs. MBAs from non-IIM institutes take home Rs 3-5 lakh per annum. The yearly package for fresh IIM grads is certainly higher at Rs 4-6 lakh p.a. Obviously it shoots up for candidates with domain experience.”

Economists and statisticians are also greatly in demand for data modelling and analysis.

By 2010, India would be leading the world in KPO. The most sought after will be professionals well versed in data search and management. Biotech and pharma graduates will also be in demand.

While data search will constitute 29 per cent, pharma and R&D will form 18 per cent of the $17-billion global KPO pie. India will have a major share – about 70 per cent of it. Other hot areas will be animation, publishing, remote education, VLSI (Very Large Scale Integrated) chip and engineering design.

Destination India

India will be the most preferred KPO destination. Only Australia will be able to compete with India in terms of location attractiveness and capability of manpower.

At present, the US alone accounts for 60 per cent of the KPO work outsourced to low-cost locations like India. UK and Canada account for 20 per cent while the rest comes from Europe.

The survey predicts that that the Indian KPO market will grow about 49 per cent by 2010. The BPO sector is slated to grow 30.6 per cent.

For clients, outsourcing knowledge-based work leads to significant cost-savings. While, an American MBA grad earns $85,000 a year as a starting salary, his Indian counterpart earns only $12,000; a significant cost-saving of 85 per cent. A Ph.D in the US earns $80,000 annually while his Indian equivalent earns 80 per cent less ($16,000 per annum).

The booming KPO industry will also lead to development of allied sectors. Courses in US GAAP, patent filing, insurance underwriting are all likely to be in great demand.

There are other sectors, such as real estate, which will also boom. Already, the BPO boom has led to sky rocketing real estate prices in cities like Gurgaon and Bangalore. In fact, the BPO sector was one of the largest acquirer of real estate in terms of sq feet last year.

“This multiplier effect could result in two to three jobs being created in other sectors for every job created in the off-shore financial (KPO) sector directly,” says Marc Vollenweider, CEO and president, Evalueserve. Construction and retail sectors will also boom.

KPO: Win-win for both clients and vendors

Due to a 12-hour time difference between the US and India, a KPO vendor can provide a 24-hour work cycle to the US client.

Outsourcing can lead to peak absorption. It’s very difficult for a firm to hire employees just for peak seasonal cycles which may be from three months to a few weeks. KPO vendors ease this problem by diverting 10-12 to a different project for certain part of the day.

The maximum share of value creation goes to clients. It cuts costs by 40-70 per cent and improves quality tremendously.

According to the survey, 30 per cent of the revenue of a typical KPO vendor is retained in the form of profits. 35 per cent goes to employee costs. The balance 35 per cent goes to overhead costs like transportation, food, telecom, security, etc.

For the client, outsourcing creates 32 per cent more value, which may go into increasing bottomlines or creating core competencies to bypass competitors. It’s a big benefit for SMEs.

At present, around 25,000 professionals are employed in the KPO industry. The figure is expected to shoot up to 2.5 lakh by 2010.

In the future, it’s KPO which will be the leading edge of India and highly skilled professionals are sure to have an upper hand. So, if you are a doctor, lawyer, MBA or an economist and want a 500 per cent salary hike, don’t forget to drop your CV at your nearest KPO!


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