India is all set to move from being the most preferred business process outsourcing (BPO) destination to a knowledge process outsourcing (KPO) destination. India In The New Knowledge Economy, a paper prepared by the Confederation of Indian Industry (CII) has revealed that KPO would grow at 46 per cent to reach a staggering $17 billion by 2010. Besides, the study points that the growth of services sector would be 8 per cent+ and its contribution to India's GDP would be 51 per cent+, affirming that India's transition from being a BPO destination to a KPO destination is imminent.

According to the paper, areas with significant potential for KPO include pharmaceuticals, biotechnology, and ICT, besides legal support, intellectual property research and design and development for automotive and aerospace industries. India stands to gain from its inherent strengths in the healthcare sector, pharmaceutical and biotech sector and ICT sector, its adds.

According to the paper, India could emerge as a global KPO hub as the business requires specialised knowledge in respective verticals and the country's large number of engineering and technical institutes are geared to address the manpower demand.

The paper states that by 2012, the healthcare sector could account for 7 per cent-8 per cent of GDP and provide direct and indirect employment to around 9 million people. India spends $22.7 billion on healthcare and the sector is the largest service industry in terms of revenue and the second largest after education in terms of employment.

Asserting that India could be an emerging healthcare hub, the CII paper states, "India has the opportunity to provide the best of the western and eastern healthcare systems." With Indian systems of medicine "staging a comeback," doctors in the West are increasingly prescribing Indian systems of medicine. The paper has observed that more than 70 per cent of the American population prefer a natural approach to health, and spend around $25 billion on non-traditional medical therapies and products, thus making India one of their most preferred destinations because of ayurveda, yoga and siddha.

Moreover, India has a proven healthcare system with over 60,000 cardiac surgeries done per year that matches international standards. Multi-organ transplants like renal, liver, heart, bone marrow transplants are successfully performed at one-tenth the cost, and patients from over 55 countries come to India for treatment.

With India possessing a cost advantage over many countries, the growth potential of the sector is immense, and also offers huge potential for investments in the sector over the next 10 years. The CII paper states that the sector would require around $22-31 billion in the next 10 years.

According to the paper, the Indian pharmaceutical industry too has practically achieved self-sufficiency and global recognition as a low cost producer of high-quality bulk drugs and formulations. The paper states that with Indian companies now offering custom synthesis services at 30 per cent to 50 per cent cost savings compared to global costs, and with clinical trials costing about $25 million as compared to $300 to $350 million, India could become the most preferred destination for outsourcing.

The Indian biotechnology sector too is now on an upswing, and is expected to earn $5 billion annual revenue by 2010. Listing the sector's advantage the paper observes that India offers excellent network of research laboratories, well-developed base industries, rich bio-diversity, extensive clinical trial opportunities and trained manpower and knowledge base, which makes it an automatic base for KPO.

The Indian IT sector too could strike it rich in a new breed of high-end knowledge-based outsourcing as global corporations are moving process like data and intellectual property researches to offshore locations and more specifically to India. The CII paper adds that India has a balanced portfolio of IT offerings and the sector is moving up the value chain, aligning itself to the latest technology needs.