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India as Threat and Opportunity

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According to this month's Red Herring magazine, India's software industry is growing at an average rate of 28 percent a year, with revenues for the 2006-7 fiscal year topping $47.8 billion, up nearly tenfold from 1998. Close to two-thirds of this total represents exports -- namely Indian software firms selling products and services to overseas customers.

Knowledge Process Outsourcing is a subset of the larger Business Process Outsourcing market, but refers to the outsourcing of higher value-added intellectual and thought process work such as pharmaceuticals and biotechnology research, financial services, research and analytics, technology research, engineering, general business research and legal services (including patent document writing, global filing, search, trademark search, and trademark registration).

India's KPO industry is currently a $3 billion business and is expected to reach $10-12 billion by 2010. This torrid growth rate should both give U.S. entrepreneurial and middle market companies pause and also one that offers unique opportunity for those positioned properly within it.

Growthink has a unique perspective on the Indian KPO challenge and opportunity. We, regularly utilize a team of Growthink-trained, India-based knowledge professionals to provide research, business modeling, and document development support to our domestic advisory teams. Also, India-based professional service firms and professional service firms that rely on India professionals are significant business competitors to our practice. Finally, we have India KPO firms as clients -- providing them strategic advisory and investment banking advice similar to that offered to our U.S. and Europe-based clients. A few quick takeaways from these various India KPO experiences:

  • The cost advantage of India-based resources is often over-rated as a critical decision driver.
  • In general, India KPO professionals are better than their Western counterparts in running complex KPO engagements on time and budget. 
  • Correspondingly, they are worse than their Western counterparts in the kinds of lateral, "out of the box" thinking and mid-course engagement re-strategizings that are part and parcel of most complex strategic advisory assignments.
  • The assignments that run best utilize a team approach that leverages these two naturally complementary skill sets.
  • For U.S.-based firms, the time zone difference (9 hours ahead of New York, 12 hours ahead of Los Angeles), when utilized correctly, can be a massive productivity gain. Growthink has developed great competencies in shortening engagement cycles and turnaround times via interfacing with our India counterparts in a manner that allows for a 24-hour workday – a profound productivity advantage.
  • India and other developing nation-based KPO is the wave of the future.  The "flattening" of the world is here to stay – domestically we must learn to position and profit from the opportunities offered by access to an incredible talent pool and prospective market opportunity, while evolving our business models and value offerings to respond to the strong and growing "knowledge"; challenge from India and elsewhere.

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Jay Turo

Dave Lavinsky