Talent crunch may effect India’s KPO services


India has aspirations to be the world’s back office, but can it deliver talent? The talent crunch it seems is the obstacle. A new study on the knowledge process outsourcing (KPO) industry shows a huge supply gap threatening to cripple its growth.

RocSearch, a UK based research services firm with a global knowledge center in India, has gathered evidence suggesting that the KPO market may jut about reach a size of $5 billion by 2010, manned by a mere one lakh instead of the more glitzy projections of a $12 billion market supported by 2.5 lakh employees. This accentuates Nasscom’s projections of a shortfall of five lakh workers in the ITeS and BPO sectors by 2010.

RocSearch suggests that the KPO market may just about reach a size of $5billion by 2010, manned by a mere one lakh instead of a $12 billion market supported by 2.5 lakh employees. Nasscom predicts a shortfall of 500,000workers in the ITeS & BPO sectors by 2010.

It is assumed that the average revenue per person is about $55,000 over the next four years, one lakh knowledge workers point to a $5 billion market. This size, though based on a robust CAGR of 32% is still 60% less than the $12 billion potential projected by big KPOs like Evalueserve last year.

The COO, Rocsearch, said the KPO sector is being restricted by low employability despite the impressive graduate turnout, as well as competing demand from other sectors as jobs grow faster than the workforce. Only a small fraction of the qualified labor force is suitable for employment in global companies and this is in part on account of the mismatch between the industry’s requirements and the academic curricula of many professional colleges.

For instance, all 2,000 odd IIM and top 10 B-school graduates would be considered employable, while less than half of the 84,000graduates from the AICTE-approved tier-II B-schools would make the grade. This may be attributed to factors like poor cultural fit and communication skills and inadequate proficiency in English, making only 10-50% of students with degrees and diplomas employable.

The study sees only five lakh of the over three million workers added to the labor pool in 2005 as employable in global firms and of these, just two of every 100 are likely to opt for work in the knowledge space.

Even if the truth lies somewhere between the two extreme forecasts, self doubt can only be healthy. Given the significance of IT in propelling Brand India to the global arena, experts, industry and policymakers may do well to act on these early warnings.

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