Intellectual arbitrage to differentiate Indian KPOs: KPMG

Mumbai: India has taken a lead in the knowledge process outsourcing space, better known as KPO. However, the services have been around for more than sometime, for example in Australia, but were not tagged with the popular acronym.

According to Pradeep Ulhas, global head, sourcing advisory at KPMG India, told the Nasscom India Leadership Forum 2008, the industry started to leverage cost advantages, but that is no more the case. Now, its all about intellectual arbitrage, with factors such as skill availability, locations, and decisions such as captive or third party centres at the forefront of the industry.

Adding further, Egidio Zarrella, better known as Edge, global partner for IT advisory practice at KPMG, said that its now about unlocking the core. ''Wetware'' is what it is about now, according to Edge, which simply put, translates as ''the power of using your brains.'' 

Edge says that if you're doing this kind of work at $40 an hour, its not KPO. It is now about intellectual arbitrage, with the top end of the market showing amount in excess of $100,000 a resource in markets such as Singapore, which are more developed in this regard, and provide niche, high end advisory services.

Edge opines that India has the people to remain number one in this industry, as KPO is a long term play, with an average time span of at least eight years before a person can give that strategic advice to customers based on knowledge, experience, and insights. ''You do not need volume, you need niche,'' he says, emphasising that it is not about the numbers. Edge foresees the number of ''boutiques'', specialised small players in the KPO space, as exploding in times to come.

Meera Sanyal, country executive at ABN Amro Bank India, and Chairperson of the bank's outsourcing initiative ACES, added that KPO is also about skills that are no longer available in different geographies, adding that ACES is now evolving from a BPO / outsourcing setup into a captive KPO, and is providing its services in fields such as trade finance that help unlock working capital, for up to 94 per cent of the bank. It is also starting to provide services in analytics and risk management.

Ranbir Singh, chief operating officer of JP Morgan Services India summed it up best, saying, ''You have to be able to differentiate in the space. Who provides the best value proposition is where the game goes.''