'Recession Has Given Outsourcing A Surge'

The KPO market is currently estimated at approximately $4 billion and is expected to touch $10 billion by 2012, while the offshore legal services market is currently estimated at approximately $300 million and is expected to reach $600-700 million by 2011. In a one-on-one with Biztech2.0, Lokendra Tomar, COO-APAC, Integreon, talks extensively about this space.

Can you please talk about the evolution of the KPO and LPO sector?

Outsourcing in India has been through two stages so far and the KPO/ LPO sector is the third wave of outsourcing. It is very similar in many respects to the first two as it followed the same principles of time difference and cost. On the other hand, it is very different as well, as this wave is more knowledge based, skill based and requires some level of qualification and expertise.

KPOs started in early 2000 and Integreon has been in this space for the last ten years. LPOs have gained traction in the last three years but have picked up steam in the last 12-18 months. Both sectors are maturing but with different business models. This industry is definitely evolving rapidly.

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What is the current situation of this sector?

This sector is going through some mixed times but is looking at a positive outcome. The companies are being affected according to the amount of business that is coming in. Companies are now willing to outsource more as compared to previously. The impact of the economic downturn will also defer according to the size of the organisation and how it tackles the current climate. Companies with a wider horizon will have it easier in comparison to those with a narrow focus. In a situation such as this, niche companies might shut shop or import clients from large companies such as Integreon. The mantra is to aggregate and expand.

What is the nature of deals that are being signed and are current contracts being honoured?

The average contract size is going up and deals for a longer duration are being signed. Current contracts are definitely being honoured on both sides. There might be modifications in the contract depending on changes on the client side, re-looking at options and fresh negotiations. Renewals happen almost every year and as most clients are global players, there are usually no discrepancies.

What are some of the emerging models based on sourcing?

Services in the KPO/ LPO space were initially being sold only as offshore services. The change that has taken place reflects that companies are trying various permutations and combinations of onsite-offshore services in order to provide a plethora of offerings. Services now range from purely offshore to a full range of different model-based services. The work is now moving from captives to third parties.

What does the future look like for KPOs and LPOs?

The future is very bright but a lot of hard work has to be put in. This industry has the potential to become a multi-billion dollar industry. The question that remains is ‘Who will take the business forward?’