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Monday, July 2, 2012

Trade with India- India a hotbed for Knowledge Processing Outsourcing Industry

Defining KPO: Knowledge process Outsourcing (KPO), is a kind of outsourcing, in which knowledge-related work is carried out by workers of a different company. The company may be located in the same country or in an offshore territory, basically to cut down cost. Unlike business Process Outsourcing, KPO entails high-value work dealt by highly-skilled workforce.

Why Trade with India when it comes to SEO services?

If BPOs comes first, then KPOs comes next, or either way around. Nobody is better qualified than India, in providing KPO services. Spurred by country�s proven expertise in the BPO sector, the KPO sector too is gunning for greater glory. In fact, the sector has managed to cultivate a huge fan base in the western world. Trade with India is new buzzword in the modern world, and the KPO sector is apparently driving this buzz to greater heights.

Though India faces stiff competition from few countries like, India, Philippines, Mexico, Irel and, Russia, Canada and China, India undoubtedly has emerged as the frontrunner, if one factors in the comparative costs analyses of various aspects that occupy special significance in the KPO world.

Following factors are taken in to consideration for comparative cost analyzes between various countries like, India,

Philippines, Mexico, Ireland, Russia, Canada and China.

� Resource Pool

� Resource Cost

� Government Polices

� Infrastructure

� Knowledge full / Expertise

Resource Pool

� India has some of the finest technical universities and the Indian Institute of Technology stands class apart. Around,

75,000 IT graduates and 20 lac English-speaking graduates pass out annually.

� The Philippines churn out only 380,000 graduates annually, of them only 15,000 are equipped with core technology


� Russia may claim to have the th ird largest population of engineers and scientists but not many speak English.

� China's basic problem is brain drain. Chinese technical schools churn out 50,000 graduates annually, but majority

migrates to west. The ones that stay back are not acquainted with English.

� Canada has good educational system, with a qualified labor force of more than 16 million.

� In Ireland 34,000 graduate annually, only 5,000 belong to the technical field.

� Mexico provides U.S. companies with millions of Spanish-speaking people.

Resource Cost

� In India labor costs have been on the upswing but have been finely balanced by falling telecom rates. Normal salaries range from $5,000 to $12,000 for technical staff, while back-office salaries range from $3,500 to $7,500.
� Philippines have similar labor costs; technical salaries range from $5,000 to $10,000 annually and back office from $3,000 to $8,000.

� In Russia IT salaries range from $6,000 to $10,000. The country is lagging behind at the back-office front. Telecom structure costs are above average.

� In China, technical salaries range from $3,000 to $8,000 annually. Still a budding BPO market.

� In Canada being a near shore alternative to U.S. has higher IT salaries as opposed to most offshore countries. Technical

salaries here range from $25,000 to $50,000.

� In Mexico labor costs is fairly lower; companies can save up to 50% by outsourcing to Mexico. The major bottleneck

appears to be unreliable infrastructure.

� In Ireland Tech salaries range from $25,000 to $35,000, making Ireland really expensive in terms of labour.

Government Policies

� Outsourcing is woven into the fabric of the country, so much so that the Indian Government has appointed a national

minister exclusively looking after the IT portfolio. Additionally, the government is for IT foreign ownership and imposes no export taxes.

� In Philippines the Government excuses companies from export taxes, fees, dues and licenses if they set up shop in one of the country�s IT parks. Government has appointed a special task force to look after the IT and KPO services.

� Russian Government follows old tax laws and structures that don�t benefit business.

� Chinese government�s trade policies and stifling regulations don�t favour trade. But things may turn for the better when China blends into the World Trade Organization.

� In Canada, there is negligible political risk. Government gives tax breaks on IT exports. NAFTA gives free trade market for IT services.

� Mexican government has so far failed to offer high level of incentives.

� In Ireland Favorable tax laws and technology-education fund provides incentives. Low or no political risk.


� Within the IT parks the facilities are excellent. But outside, one can�t be sure of the facilities provided.

� In Philippines in the last 13 years, IT parks have come up. Discarded U.S. military bases are being used as dependable telecom infrastructure.

� Russia�s few IT parks are good, but outside the quality and quantity nosedives.

� In China Infrastructure can be problem outside major cities, but China is enhancing its networks, particularly telecommunications as fast as U.S.

� Canada has excellent telecom infrastructure

� Mexico excellent technology parks

� Ireland also has solid technology parks

All the aforesaid factors have emboldened India�s status as the right KPO destination. Trade with India on the KPO front is a major draw for foreign players, considering India�s ever-growing population of highly educated people who take up high-end knowledge-based work and research with consummate ease. With the burgeoning of engineering and technical institutes in India, skilled manpower will never become an issue with India. As per the study conducted by Confederation of

Indian Industry, India�s shift from a BPO destination to a KPO destination is inevitable.

The cost-efficiency factor

India�s unique selling proposition is its quality yet cost-effective workforce. So naturally, trade with India is turning out to be an attractive proposition for foreign companies. For example, drafting and filing of patent application in the US is very expensive. To draft and file an application in the United States and Trademark Office, companies have to fork out almost $10,000 to $15,000. If companies outsource their work to India, they can save up to 50 percent.

KPO services that could be outsourced to India:

� Training & Consultancy

� Research & Development

� Business and Technical Analysis

� Intellectual Property (IP) Research

� Learning Solutions

� Animation & Design

� Network Management

� Business & Market Research

� Pharmaceuticals and Biotechnology

� Medical Services

� Writing & Content Development

� Legal Services

� Data Analytics

More foreign firms heading towards India

To capitalize on the rising opportunities in India, many leading MNCs have come forward to
trade with india like, Patent Metrix, Cantor-Colburn and Schwegman, Lundberg, and Woessner & Kluth have set up shop in India. Pharma giants like Astra Zeneca and GlaxoSmithKline have rolled out drug discovery centers at low-cost destinations to propel their research and development activities. Renowned t elecom and IT companies, like Motorola, Intel, IBM, Cisco,

Texas Instruments, Nokia and Philips have also launched their R&D centers in India.

It is anticipated that India will have higher growth rate in the KPO sector of 45 percent as opposed to 25 percent in the BPO segment. However, BPO will continue to play lead role in revenue generation and job creation, due to the voluminous nature of this industry.

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