New York – A specialized subset of the KPO industry is the MRO industry (Market Research Outsourcing). We discussed in yesterday’s blog that the Indian Chamber of Commerce had throttled back its estimate for the size of the Indian KPO industry from an earlier estimate of US $15 billion in 2012 to $10.5 billion in 2012. This, compared to the current size of $3.8 billion.
The ability to grow the KPO and the MRO businesses relies on finding qualified employees to fill the gap between demand and supply. From my own experience in teaching graduate finance, I have noticed the proportion of Indian students in my classes has moved from about 10% of the class to about 50% over the past 5 years. While it is always annoying to hear anecdotal information stated as a market factor, it seems that in this instance the observation probably is indicative of a broader trend.
In the MRO space the need for analytical skills is expected to increase dramatically. Yet one of the fastest growing demand segments in the MRO space is for multi-lingual services. This demand recognizes the strength of the outsource model while acknowledging the need for research to be distributed in different regions and in different languages. One need only look at a global bank’s research budget to understand the potential economies of scale of this model.
A November 23, 2007 article in Business Line (written by Adith Charlie) discusses the outlook for the MRO industry. The article indicates that one of the early movers in the MRO space has been Evaluserve. Evaluserve, a Guragon-based KPO, has established a MRO team of about 90 analysts, having language skills in 55 different languages. The team contains 60 non-Indian residents. Evaluserve started this model in 2004 with only 4 team members.
Another MRO is Ugam Solutions, which has set up a multi-lingual team in London to provide multi-country research capabilities in 15 to 20 languages.
Given strong demand and a somewhat inelastic supply curve, the pricing of MRO and KPO services can be expected to continue to increase. As the international teams become more experienced their pay packages will converge to local standards. To counter this, KPO and MRO services are expanding by providing vertically integrated services. Clients can now job-out a larger portion of their research to the MRO international research teams. The MRO teams then in-source to their Indian-based analytical teams to cut costs.