BANGALORE, INDIA: With a growth rate of 51 percent annually, Knowledge Processing Outsourcing (KPO) is emerging as one of the fastest growing business opportunities for specialized players. India's leading global Information Technology provider -- Syntel Inc -- with global development centers in India and US has leveraged on its domain knowledge in financial services and forayed into KPO space.

In a discussion with Manu Sharma, Associate Editor of CIOL, Keshav R. Murugesh, president & chief operating officer of Syntel India speaks on Syntel’s service portfolio of consulting, IT and business process outsourcing and also how Syntel emerged as one of the largest diverse 3rd party services provider across the investment operations spectrum.

CIOL: Why and when did Syntel foray into KPO space?
KM: KPO with a growth rate of 51 percent annually, is one of the fastest growing business opportunities for specialized players like us. Today, KPO as a whole generates $3.05 billion revenue annually and directly employs around 25,000 people in India. The worldwide KPO market is expected to grow to $16.7 billion in revenues by 2010-2011. From this, India would account for $12 billion.

Syntel had a rich 23 years heritage of providing IT services to Fortune 500 financial services firms across banking and capital markets. In 2003, we completed the entire build-out of a complex performance attribution system for the investor services division of one of the top 3 global custodians. It made logical sense for Syntel to leverage its extensive domain knowledge in financial services and provide an end-to-end service portfolio to existing and new clients. We forayed into KPO in late 2003 providing middle office investment operations services to one of the top 3 global custodians.

CIOL: What are the other businesses Syntel is presently into in India?
KM: In early 2000, Syntel’s revenue was divided into staffing services and IT outsourcing services. We have remodeled our portfolio based on emerging trends and changing customer requirements. Today, we service clients across verticals via a three-pronged integrated service portfolio of consulting, IT and business process outsourcing. Our consulting services range from technology to process engineering across verticals. In KPO, Syntel is arguably the largest diverse 3rd party services provider across the investment operations spectrum. For e.g. Syntel KPO services one of the top 3 custodians across North America, UK, Europe and Asia Pacific for the entire middle and back office investment operations spectrum. We manage the entire post originations functions for a large retail brokerage firm. Similarly, we have an almost 1000 FTE KPO operation across the life insurance vertical.

Syntel provides customized IT, BPO and KPO solutions to verticals such as automotive, education, retail, finance, insurance, healthcare and life sciences.  The BFSI industry overall outsources more than 20 percent (amounting to $400 billion) of its cost base to offshore services. Syntel offers value to its customers by offering services such as cash management, settlement, underwriting, claims, reinsurance etc.

CIOL: How much of business does KPO contribute to Syntel?
KM: The KPO business is the fastest growing vertical across Syntel businesses. KPO is a key revenue driver for Syntel, exiting the year 2007 at 19 percent of total revenue and posting 155 percent year-over-year growth.

CIOL: Is KPO emerging big in India like the BPO sector? If yes in what areas do you see the growth?
KM: Yes, the evolution and maturity of BPO services has given way to more knowledge intensive outsourcing services in India. The KPO industry is growing at a fast pace and the high talent base of chartered accountants, doctors, MBAs, lawyers and research analysts in India is certainly going to capture a big pie of the global KPO business.  The knowledge process outsourcing industry (KPO) is likely to grow 45 percent in size by 2010 whereas the BPO industry, only 26 percent. Global KPO pie in 2010 will be around $17 billion of which $12 billion (70 percent) will be outsourced to India. Thus, India is fast emerging as a global KPO hub.

We see the fastest growth across banking and financial services, data management and legal services. Similarly HRO and pharmaceutical outsourcing shows promising growth by 2011.