Released on = April 20, 2007, 5:52 am

Press Release Author = Evalueserve

Industry =

Press Release Summary = Evalueserve anticipates that vendor capacity will surpass
captive headcount by 2010 and that the 'Buy' model will become the default model for
90% of the new centres to be set up in 2010 and onwards. The total number of
companies using captive and third-party KPO-services is forecasted to rise from
about 900 in 2006 to an estimated 5,000 in 2010.

Press Release Body = As firms continue to wrestle with potential implementation
models in the unique Indian knowledge services space, Evalueserve presents its views
in the new white paper titled 'The Future of KPO - Make vs Buy'.

"Evalueserve has been living and breathing KPO for over six years now, and we have
observed several very significant and measurable trends that have been confirmed by
independent consulting firms, industry experts and even strategy planning
departments of large corporates," says Marc Vollenweider - CEO, Evalueserve. "First,
while unique in many ways, KPO is closely mirroring the evolution of the IT services
industry, but with a 10-year shift. Much like the IT offshore industry after the
year 2000, we expect the vendor model ('Buy') to surpass the captive model ('Make')
in KPO by 2010 because the average value proposition is better in terms of cost,
time and quality. Additionally, our analysis reveals that much of KPO's growth will
come from Small and Medium-sized Enterprises (SMEs) who can now also leverage KPO,
provided from India and other offshore locations. This tended to be a prerogative of
only large corporations before the emergence of a mature vendor base", added Mr.
Vollenweider.

Just as IT services in India have migrated almost exclusively to vendor solution
providers over a period of time, Evalueserve sees the same trend developing in KPO.
Evalueserve's detailed research and analysis shows that the third-party vendor
solution provides a much faster implementation in 4-6 weeks as opposed to 6-12
months in case of captives, offering up to 30% lower up-front and operating costs,
higher degree of flexibility and control, and lower medium-term staff attrition.
Recently, KPO vendors have started setting up operations centres in different
continents, such as Latin America and China, servicing their clients in local time
zones in multiple languages, which captive set-ups in India cannot provide.
Moreover, vendors have started creating specialised services and have their own
know-how, for example, in Intellectual Property Asset Management, thereby adding
value over and above offshoring. These advantages are likely to drive SMEs and those
large companies without pre-existing captives to choose the 'Buy' approach. Even
large companies with existing captives will increase the amount of dual-sourcing,
i.e., outsourcing work to their captive and external vendors in parallel.
Evalueserve anticipates that vendor capacity will surpass captive headcount by 2010
and that the 'Buy' model will become the default model for 90% of the new centres to
be set up in 2010 and onwards.

Evalueserve projects that the KPO industry in India will grow from 75,000
professionals, generating revenues of USD 3 billion in 2006, to 250,000-280,000
professionals, depending on the scenario and USD 11-12 billion in 2010. This will be
driven by the widespread acceptance of the KPO model and by new SME demand, a market
which was formerly not addressable. Consequently, because the average engagement
size by SMEs is most often small, the total number of companies using captive and
third-party KPO-services is forecasted to rise from about 900 to an estimated 5,000
over this same period. Evalueserve also expects that by 2010, vendors will add about
55% of new KPO capacity as opposed to 45% for captives. Also, more than 80% of all
KPO set-ups will use the vendor model. Even beyond 2010, the market potential from
SMEs is very large. Of an estimated 10 million SMEs in the US and Europe, 5-10 % or
500,000-1,000,000 could potentially benefit from KPO.


Web Site = http://www.evalueserve.com/

Contact Details = EVS Media Relations
Tel: +91 124 4154000
pr@evalueserve.com