India's knowledge process outsourcing (KPO) industry dealing with financial services is set to become $5 billion by 2010, global consultancy firm KPMG said in a report.

The KPO industry is booming in India. The industry is expected to grow to $10 billion to $17 billion by the year 2010, KPMG said.

The financial services KPO market in India is growing due to various reasons such as availability of high quality and often certified talent in offshore locations, moves taken to push outsourcing strategies beyond traditional businesses and global recognition of standards, qualifications, skills and experience.

'Success in offshoring business operations has encouraged many multinationals to start outsourcing key business processes and high-end knowledge work,' said Pradeep Udhas, global partner-in-charge, sourcing advisory, KPMG.

'Cost savings, operational efficiencies, access to a highly talented workforce and improved quality are all expectations driving the offshoring of high-end knowledge based processes. However, without a measured and strategic approach to KPO, organisations run the remaining at the low end of outsourcing value chain where labour arbitrage benefits are being eroded daily,' Udhas added.

However, there are some challenges that are facing the KPMG industry that needs to be addressed to sustain its growth.

Problems such as maintaining higher quality standards, investment, lack of talent pool, absence of higher level of control and enhanced risk management may pull down its growth.

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