Talent crunch may eat into India’s KPO pie

The growth of knowledge services business in India will be determined more by the size of available labour force than the dynamics of business demand, according to a study by UK-based research services company RocSearch. With relatively low labour costs, skilled professionals proficient in English and software skills, there is a high probability of India cornering a sizeable chunk (around $5 billion) of the estimated $17-billion knowledge process outsourcing (KPO) industry by 2010-11. “But knowledge services players have been finding it increasingly difficult to get the right talent, especially at the middle-management level.

This talent crunch is becoming pronounced in spite of an annual addition of over 3 million graduates and professional degree and diploma holders to the existing talent reservoir of over 100 million,” it said. Every year, around 950 business schools in India produce about 90,000 MBA degree holders, compared with 13,500 in the UK. Over 4,50,000 engineering graduates and 1,500 PhDs are added to the country’s workforce every year. About 55,000 masters in computer applications and around 25,000 pharmacists graduate annually. Only China and Russia come close to India in terms of number of professionals. But in spite of the impressive number of the qualified professionals that the country produces every year, the available pool of usable talent is smaller than the total labour supply, the study said.

Further, jobs in India are growing faster than the workforce, with off-farm jobs rising 2.5% a year between 1998 and 2005, whereas the labour force grew only 2%. Currently, under 0.1% of the total number of people employed in the public and private sectors are engaged in KPO jobs. Only a few Indian KPOs have over 1,000 employees in their rolls today. The study estimates the total number of people working in this industry would not be more than 1,00,000 by 2010. “A burgeoning manpower-supply gap, therefore, is likely to limit India’s ability to take advantage of a knowledge services boom,” it concluded.