India set to ride the KPO wave: Report

Exploring the business opportunities KPO presents in India, Udhas said that even at 20 percent annual wage inflation, India will continue to retain cost competitive advantage over the matured markets for at least 15-20 years.

"The salaries in India now allow us a 10-15 years of free way to use the cost benefits to our advantage. However, there needs to be an understanding of what is needed by the companies," Udhas said.

India can also become a hub for a lot of countries in the region like Sri Lanka, Vietnam or even Pakistan, he added.

According to Udhas, though the financial sector will continue to fuel the growth of the Indian KPO market, pharmaceuticals, core accounting and legal sectors will gain grounds.

Udhas was also hopeful that the captive units would continue remain dominant though catering to niche areas in the KPO landscape.

According to the report, as the KPO industry moves from basic and moderate complexity work to high complexity work, the boundaries separating the "core activities" of a global institution from the "non-core activities" are likely to be redrawn and Indian KPO providers could tap the opportunity by offering services of consultants with cross functional experience who would provide strategic inputs for business. These could be in the areas of investment research, IP launching, data analysis, business research among others.

The KPMG report follows another report published by GlobalSourcingNow which identifies India as the leader in KPO services.

"The myth that Indian companies can only provide software coolies is changing as businesses tap into its large pool of knowledge workers. By 2010, the KPO market in India will be worth $12 billion," the report said adding that the KPO sector in India will employ more than 250,000 professionals by 2010.

Apart from India, the report predicts that countries such as Russia, China, the Czech Republic, Ireland, and Israel will eventually join the KPO industry.