India's Knowledge Process Outsourcing (KPO) market is forecast to grow by 25-30 per cent annually till 2013, driven by rising demand for professional services, global research firm Gartner said.
The emerging KPO space, which constitutes a small part of the overall business process outsourcing (BPO) sector, is estimated to have a market size of $50-70 million at present.
"India's KPO market is presently estimated to be $50-70 million in size. It is forecast to see a compounded annual growth rate of 25-30 per cent through 2013 and coming from a smaller base, the growth is higher," Gartner Research Director (Technology & Service Provider Research) Tervinderjit Singh said.
Opting for KPOs can be transformational for businesses in reducing costs and formalising ways of working in professional services, such as legal support.
"The rising demand for profession-based services is expected to drive the growth in the industry. They include research for capital and financial markets, para legal works, editing jobs for international publishing houses among many others," Singh added.
KPOs core value propositions are premised on providing business-related analysis and expertise on an ongoing basis rather than transactional business process or technology-based expertise. For example, contact centres are a BPO capability, but collections analysis is a KPO analytics service.
Asked about growing competition from other emerging markets for such services, he said, "India is still ahead, although other offshoring sites like Philippines and Indonesia are emerging. But these countries are still not mature enough in high-level professional work which India can provide with the strong skill sets available here."
Moreover, the ongoing European debt crisis is unlikely to have a significant impact on the business volumes of domestic KPOs. However, those outsourcing firms -- which have more than 30 per cent exposure in northern European countries -- will have to face some tough times even as their long-term prospects remain strong.
"Domestic outsourcing firms should maintain a right geographical balance from the point of view of their client base and opt for multi-shoring of their operations to hedge against such a crisis," Singh added.