The pain of not being a top BPO destination often comes out during conversations in Ahmedabad. We rue the fact that Bangalore and Hyderabad, once smaller cities than Ahmedabad, have now edged past us. However, we believe that
the greater pie remains to be won. That of KPO. And that can have an Amdavadi signature. If we play it right.
Rarely does a conversation about Bangalore and Hyderabad end without us feeling sorry for missing out on the BPO bus. And then invariably begins the post-mortem of the demise. Usual suspects like lack of language skills, prohibition, occasional social unrest and lack of good higher education institutes are handed over the blame and the conversation is then repeated all over again.
Without going into the merits (or the lack of it) of the aforementioned arguments, let’s rather look ahead to the immediate future. A future where Ahmedabad would have a rightful place under the IT Sun.
Business Process Outsourcing (BPO) is the leveraging of technology or specialist process vendors to provide and manage an organization’s critical and/or non-critical enterprise processes and applications. The most common examples of BPO are call centers, human resources, accounting and payroll outsourcing. Business process outsourcing may involve the use of off-shore resources.
BPO is a part of the Outsourcing Industry and is dependent on Information Technology; hence it is also referred to as Information Technology Enabled Services or ITES.
Maybe we all know about that. The curiosity might actually be about what exactly constitutes a Knowledge Process Offshoring (KPO) and how it is different from a BPO.
Well, in a way, KPO is an upward extension of a BPO. The latter is getting differentiated on the basis of the level of skill and knowledge required for the job. As one moves towards KPO, the employee skill levels required increase.
Fields of work that the KPO industry focuses on include intellectual property or patent research, content development, R&D in pharmaceuticals and biotechnology, market research, equity research, data research, database creation, analytical services, financial modeling, design and development in automotive and aerospace industries, animation and simulation, medical content and services, remote education, publishing and legal support.
Infrastructure and language alone would not win future battles of the present players
Rising infrastructure costs and salaries are making BPOs sweat in India these days. It’s hitting bottom lines of those companies. Add to it the fact that a lot of smaller, developing countries are brushing up their language skills and offering competent infrastructure at much more competitive prices. Neither the rising costs here nor the challenge by new kids on the block would be able to decimate India’s BPO but it would definitely bring down the number of players and the extent of margins on business in the long run.
The scenario is simple. There are players who revel in small cameos in domestic 20-20 cup matches and then there are some who graduate to ODIs and later to test matches. The first format is like the fast moving but not-worth-investing-in-the-long-run scrips at the BSE. The format has its own utility – especially with regards learning the basics and spreading the game (business); but does not provide lasting avenues for any long term loyalty (strong business relationships) amidst the two sides. The last format, however, is the most evolved state of interaction – there is a complete sense of fulfillment & attainment (revenue) for the players and an intimate, deep-rooted passion (stake) by the crowd (consumers / market).
The basic idea of every product, brand or idea is to move up the value chain. The time has now arrived in India to move beyond and above ’pure’ BPOs. The industry realises that and hence the transformation of the small and big BPOs of today into KPOs of the future. It’s a good time to board the bus, Ahmedabad!
MBAs, PhDs, engineers, doctors, lawyers and other specialists can hope to be able to quote handsome price for their knowledge. Add to it the fact that a mere internet can turn the aforementioned (individual) specialists into knowledge hubs big enough to compete and better some lower end BPO companies.
It has to be noted that already some of the BPO work meant for India has started to go to countries like Bangladesh, Pakistan, Phillippines and Ireland – depending upon where the work originated. So in a way, the hope that some of the work that comes Bangalore’s or Hyderabad’s way would come calling us in Ahmedabad has been nipped at the bud itself. The lower end work would soon increasingly start leaving India. As it should, if India has to become a real IT superpower via cutting edge research and solutions for the world in general.
So, why should Ahmedabad be hoping to catch the KPO bus?
Simply because it has got what it takes to be a key KPO player. English language was never the city’s best pal, but understanding of some key faculties has always come naturally to it.
But first, let’s see what KPO is all about. Broadly speaking, KPO stands for the following:
- Legal services
- Intellectual property
- Research and design
- Development of automotive and aerospace industries
Clearly, the workspace suddenly looks more promising for young Amdavadis. While the city is almost the home of India’s Pharmaceutical industry, allied field like Biotechnology are naturally advantaged by the presence of the former. Presence of Gujarat High Court in the city and the thousands of law professionals makes sure that legal services, including those related to intellectual property rights are well understood here. Furthermore, whether it is in the field of research or design, (English) language proficiency – the single biggest hurdle for Amdavadi youth – would count for much less than the voice dominated BPOs of the present times.
BPO (In the blue corner) vs KPO (In the black corner)
- While a BPO job has got a lot to do with operating within fixed parameters (language, time, tasks, ready-made solutions etc), a KPO job actually demands human discretion, judgements and a continuos evolution of the fundamentals of the task
- While BPO providers specialise in managing repetitive and transactional chores like payroll and accounts, KPO offers the probability of a unique challenge in every new case regarding intellectual property, legal and medical research, pharma, biotechnology-related research and process outsourcing.
- Billing rates for KPO are higher at $30-45(Rs. 1500 – 2250) per hour compared to just $10-14 (Rs. 500 – 700) in the BPO business.
- KPO has a lower attrition rate – less than 20 per cent compared to over 40 per cent in BPOs.
- Skills required in KPO are different, generally much higher, from what plain graduates that a BPO manages with
While an American MBA graduate earns $85,000 a year to start with, a mere $12,000 makes his Indian counterpart happy and loyal. Similarly, a Ph. D in the US could earn something close to $80,000 annually while an Indian Ph.D earns just about $16,000 per annum. The difference in the fees of lawyers of the two country is even starker.
But what would take the cake would the abundance of pharma / bio-chem / botany / chemistry students that Ahmedabad produces effortlessly year after year. The mind-numbing market of filing patents for drugs and / or a particular molecule should see increasing number of Amdavadi student professionals making a name for themselves.
The ingredients are all present to make a killing with this next big wave in the business horizon of modern Ahmedabad. The city is booming beyond imagination. There is a good concoction of local enterprise and global awareness building up in the city. Educational institutes like Nirma University and DAIICT, along with old guards like L D Engineering college are now bringing out much more focused youth. The freshers from these colleges are not only in good numbers but also of a very sound foundation.
Giving greater hope of an exciting future is the very aggressive wooing of IT majors like Satyam, Infosys by the Gujarat government. With IT cities like Mindspace by Rahejas coming soon, the city would truly start boasting of a cosmopolitan, KPO ready workforce – coming here to work from across the nation.
According to a CII study, India would soon become the most preferred destination for KPOs as it grows 46 per cent to touch 17 billion dollars by 2010. Let us be the driver of this one.