KPO decoded

What is KPO?

It is being claimed that KPO is one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping into Knowledge Process Outsourcing because of its favorable advantageous and future scope. But, let us not treat it only a ‘B’ replaced by a ‘K’. In fact, Knowledge process can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. And when this activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing.

Knowledge Processing Outsourcing (popularly known as a KPO), calls for the application of specialized domain pertinent knowledge of a high level. The KPO typically involves a component of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). KPO business entities provide typical domain-based processes, advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is handling more amount of high skilled work other than the BPO Industry. While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency.

In fact, it is the evolution and maturity of the Indian BPO sector that has given rise to yet another wave in the global outsourcing scenario: KPO or Knowledge Process Outsourcing. The success achieved by many overseas companies in outsourcing business process operations to India has encouraged many of the said companies to start outsourcing their high-end knowledge work as well. Cost savings, operational efficiencies, availability of and access to a highly skilled and talented workforce and improved quality are all underlying expectations in outsourcing high-end processes to India

The future of KPO has a high potential as it is not restricted to only Information Technology (IT) or Information Technology Enabled Services (ITES) sectors and includes other sectors like Legal Processes, Intellectual Property and Patent related services, Engineering Services, Web Development application, CAD/CAM Applications, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO ) etc.

In today’s competitive environment, focus is to concentrate on core specialization and core-competency areas and outsource the rest of the activities. Many companies and organizations have come to realize that by outsourcing non core activities, not only cost are minimized and efficiencies improved but the total business improves because the focus shifts to the key growth areas of the business activity.

Scope and Future of KPO

According to a report of National Association of Software and Services Companies (NASSCOM), the Indian chamber of commerce that serves as an interface to the Indian Software industry, Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India. Another report predicts that India will capture more than 70 percent of the KPO sector by 2010. Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also expected to join the KPO industry.

According to a recent study by “Evalueserve, a Gurgaon based outsourcing company having service chart for global world”, the global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent, from $1.2 billion in 2003 to $17 billion in 2010. Compare this with the prediction for the low-end outsourcing services market. This is expected to have a CAGR of 26 per cent, from $ 7.7 billion to $39.8 billion in the same period.

Evalueserve says India provided $3.5 billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of 36 per cent during 2004 to 2010. Hence, it is likely to earn $30 billion in 2010 by providing these services.

Says country general manager, Kelly Services, Achal Khanna “India still maintains the competitive advantage for providing, the combination of the most cost-effective and high quality manpower- this is India’s strength in the off-shoring business”.

In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO), etc.

“Over the past year or two, the outsourcing industry has been throwing up jobs for Doctors, Engineers, CAs, Architects,” says Jacob William of the Bangalore-based Outsource2India, which employs 500 people and offers services in the big-buzz, big-bucks area of knowledge process outsourcing. “Unlike the first wave which was more about entering data and answering phone calls, these jobs involve skill and expertise.”

Also, of course, the talent is much more affordable. “Law firms in the US charge an average of $400-450 per hour, and we do the same work for $75 to $100 an hour” says Kamlani” who is an outsourcing provider in the same area.

In the Indian context, KPO salaries could be 25-50 per cent higher than those offered to the same domain experts such as Engineer, Doctor, CA, Lawyer, Architect, Biotechnologist, Economist, Statistician and MBAs, it said.

In its annual publication Strategic Review 2005, Nasscom has said the high-end activity of the BPO industry—the KPO or knowledge process outsourcing could be worth $15.5 billion by 2010.

According to earlier estimates, the BPO industry itself was expected to be about $20bn by 2008, hence a very significant portion of the sector—in excess of 50% is now projected to be knowledge based. This represents significant metamorphosis of call centre sector business to completely different model. Interestingly, Sunil Mehta, Nasscom vice-president research, distances himself from the estimates.

The projections are based on a white paper released by Evalueserve. The paper cites reasons for a possible KPO boom. It says higher savings by outsourcing knowledge based activities combined with the scarcity of specialized talent in developed countries could lead to growth in the KPO sector.

Billing rates for KPO are higher at $30-45 per hour compared to just $10-14 in the BPO business. However, the paper also warns of several challenges like higher quality standards, greater investments and inadequate talent.

The study estimates that while the compounded growth rate of BPO till 2010 would be just 26% KPO is expected to be grow at almost 46%.

Bottlenecks in Future Growth

A study on Knowledge Process Outsourcing (KPO) sector shows a huge supply gap that threatens to cripple its growth. Rocsearch, a UK-based research services company, has gathered evidence suggesting that the KPO market may just about reach a size of $5 billion by 2010, manned by 100,000 people instead of projections of a $12 billion market supported by 250,000 employees.

This accentuates Nasscom’s projections of a shortfall of 500,000 workers in ITES and BPO sectors by 2010.

Assuming an average revenue per person of $55,000 over the next four years, 100,000 knowledge workers point to a $5 billion market. This size, though based on a CAGR of 32%, is still 60% less than the $12 billion potential projected by big KPOs, like Evalueserve, last year.

Rocsearch COO, Ashish Sinha says the sector is restricted by low employability despite high graduate turnout, and competing demand from other sectors as jobs grow faster than the workforce.

For example, all the 2,000-odd IIM and top 10 B-School graduates are employable, while less than half the 84,000 graduates from Tier-II B-Schools would make the grade.

The study sees only 500,000 of the over 3 million workers added to the labour pool in 2005 as employable in global firms and of these, just 2 in every 100 are likely to opt for work in knowledge space.

source: kpoexperts

BPO boom moving to smaller cities

More and more domestic companies are setting up BPO units in district headquarters, tier-III cities and non-IT clusters to save on real estate costs and stem attrition rates.

While Satyam Computer Services and the Jindal Group have already started BPOs in small towns of Andhra Pradesh and Karnataka, respectively, new players are in the early stages of talks in this regard.

Source: Rediff.com

Iron and steel major Jindal Group, which runs a voice- and data-based BPO unit in Torangallu in Bellary district of Karnataka, is expanding to other parts of the state. Informed sources said, with an aim at replicating its success in Bellary, the company had sought the Karnataka government’s support in spreading business to other district headquarters such as Shimoga, Hassan, Raichur and Kolar.

According to sources in the Karnataka IT department, JSoft, Jindal Group’s software unit, is establishing a second BPO unit in Bellary with an investment of Rs 7-8 crore (Rs 70-80 million). It has also finalised plans to establish a third BPO unit in Hubli IT park.

“The attrition rate in major IT clusters is very high. This is forcing the IT companies to look at tertiary cities to tap the manpower. Basically, they are looking for college students, who can execute work after receiving training. The state has received applications seeking space for BPOs in cities such as Tumkur and Kolar,” M N Vidyashankar, Karnataka’s IT secretary, said.

Byrraju Foundation, the NGO outfit of Satyam Computers, is already running a BPO in Jallikakinada village in West Godavari district of Andhra Pradesh. The company is planning to open seven more such BPOs in rural areas of the state.

Similar BPO operations are being carried out in Kuppam in Andhra Pradesh and Kizhanur village in Tamil Nadu by HP and Chida Soft. Bangalore-based SLN Tech Services, which provides e-ticket booking service to a host of private bus operators and resorts in south India, has set up operations near Hebbal, a village on the outskirts of Mysore.

The company has shown interest in taking over e-ticket booking services for Karnataka State Road Transport Corporation. “We are also applying for similar services in Andhra Pradesh. We are planning to open a second BPO unit on the outskirts of Hyderabad,” said SLN Tech Services Director Dinesh Babu.

The North West Karnataka Road Transport Corporation, a Karnataka government undertaking, is planning a BPO unit in Hubli to process the discount passes meant for students and senior citizens.

The approval is pending before the Karnataka state Cabinet.IT firms are not only moving to district headquarters, but are also setting up operations in towns and cities, which do not belong to any of the IT clusters. Bhilwara Scribe, a unit of the textile and power conglomerate LNJ Bhilwara Group, operates a BPO in Bhopal, Madhya Pradesh, providing services in medical transcription, data processing and indexing for 15 hospitals and 10 clinics across the US, Canada and Belgium. It also provides services in business transcription in HR-related companies as well as conferences.

“Though Delhi and Bangalore are the hot destinations for IT and BPO companies, we opted for Bhopal. We had tested and interviewed 500 people in New Delhi and then tested the same number of people in Bhopal. The results showed the quality of manpower was almost at par.

Further, Bhopal had an edge due to low infrastructure cost with potential and untapped manpower. We were the first company to venture into this sector in Madhya Pradesh,” said Rajvind Ahluwalia, CEO, Bhilwara Scribe. Nasscom Vice-President Ameet Nivsarkar said: “It’s a healthy move and is expected to create a lot of employment in the rural areas.

Raining jobs in retail sector

It’s raining jobs in retail sector, a trend much similar to the job scenario prevailing in IT and BPOs few years back.Big players in Indian retail sector such as Big Bazaar and Pantaloons are planning to recruit 1, 10,000 more people by 2010 to stay in step with rapid expansion plans. Recruitment process in organized retail industry has peaked over the past, with the total employee strength up from 5.4 lakh to 16 lakh.Increasing attrition rates is the main reason encouraging many to look at retail jobs as a promising career. Certified training, attractive salary packs, insurance schemes and a conducive working environment will come in job package of those applying for these lucrative jobs.Outlined below are the factors attracting attention of job hunters to take route to booming retail sector in India:Qualifications Required: Educational qualification of the employee has never been any major criterion for retailers. They even recruit those who have completed their high school as they just want their front end staff to be rich in basic communication skills and native intelligence.Insurance and Incentive Benefits: Insurance schemes have also been made attractive in most cases. The life insurance scheme ensures the employee regarding bread and butter for his/her family after him/her. Accident insurance of Rs 1 lakh and above is increasingly becoming common in Indian retail industry.Extensive Training: Almost all retail brands provide productive training to their employees especially front desk staff. Apart from helping the recruits in nourishing their personality and skills, these training programs offer them certification. For example: Café Coffee Day (CCD) which runs its training school in Chilkmangalur offer its staff with a certification of hospitality management if they work with them for at least two years.Add to this, the Indian retail sector also have jobs for homemakers. Most retail brands are looking forward to recruit qualified homemakers holding high degrees like MBA as project executers, live kitchen supervisors, trainers, co-ordinators, and brand promoters.

Source:Indiarealtynews.com

India’s retail boom

The age of consumerism is here. India is currently experiencing a retail boom with various national and international retail players trying to grab their share of the growing Indian middle class.At the India Retail Forum 2007, Vinod Sawhney, president and CEO of Bharti Retail, discussed the importance of retail in a growing economy. He highlighted the rapid rise in India’s foreign exchange to US$ 271 billion in 2007.

Source: agencyfaqThe average household disposable income is growing by a healthy 5.9 per cent and the average individual disposable income is growing by 3.6 per cent each year. At this rate, the average household income in India is expected to triple over the next two decades.

By the end of 2005, the total expenditure on consumer products in India was Rs 17 trillion. Sawhney said that keeping all other factors of growth in mind, this will quadruple in the coming two decades and reach Rs 70 trillion by 2025.

In such a scenario, consumption will be driven by certain key locations in the country such as the top 10 cities, including Chandigarh, Goa, Mumbai, Pune, Bangalore, New Delhi and Gurgaon. These cities will facilitate consumption growth in new consumption categories such as jewellery, pharma, fashion, entertainment and services.

Currently, the food and grocery category commands the highest percentage share of household spending. Most Indians still spend 46 per cent of their income on food. According to Sawhney, food and grocery is a very important driver of consumption and will remain so in the coming decades also. But the share of food and grocery in the pie will come down in comparison to other categories such as mobiles, real estate, automobiles, fashion and other entertainment services.

Sawhney says that in a resurgent economic scenario, the retail segment is likely to benefit society 360 degrees. Retail creates 10 per cent of the jobs in the world and contributes 10 per cent to the world share of GDP. In India, retail is likely to create an estimated two million jobs by the end of 2010. The masses will thus benefit with opportunities for employment and franchising.

Consumers will get goods and services at lower prices but better quality. There will be an improvement in the overall shopping experience with wider assortment of and access to goods, which will in turn cater to the diverse populations across the country. Farmers will benefit from the elimination of middlemen and will thus earn higher profits and have access to better markets. Industries will get better infrastructure to sell their goods and services and there will be a radical improvement in the packaging and designing of products.

source: agencyfaqs!

Hot & Happening Sectors

The stock market may go up and down, but the job market is only headed in one direction — and that is up and up. Practically all sectors of industry are upbeat, expanding, and on the prowl for talent. Jobs in all sectors are growing, and along with them are salaries and opportunities. So can 2007 be any different? The buzz in the shopping malls and markets indicates that the retail industry is slated to be the biggest generator of mass jobs in the coming years. Followed by IT and IT enabled services such as the BPOs and KPOs, telecom services, banking and finance, hospitality and entertainment, healthcare and education are just some of the booming work areas. Management continues to hold sway and is emerging as the backbone of every organisation. The entertainment and fashion industries, as well as the media, are luring talent with attractive job profiles. Moreover, the bulk of the action in the coming years will not be confined to the large cities where traditionally the big job market has been, but in smaller cities, where consumers are becoming increasingly affluent. With the growing middle class and the increasing purchasing power, the retail sector is all ready to boom. As Sunil Mittal of Bharti plans a huge retail empire in partnership with Wal-Mart, many others are following suit. Retail companies like Pantaloons have plans to take on around 7000 personnel in the next two years, Shopper’s Stop is looking for 3000 more, while companies like Reliance and Tatas have huge plans to get into this sector too. According to the CII, the organised retailing in India is expected to touch Rs1,10,000 crore by 2010. With 5000 people required to man a single mall, and 250 malls expected to be set up in the next five years, organised retail in India will provide new jobs to 50,000 with all levels of skills. Companies like the ITC also have plans to include agriculture retail, providing jobs to farm labour, while putting more money in the farmer’s pocket and bringing farm products directly to the urban consumer. In terms of sheer number, the IT and IT services sector continues to be in the lead and will require the largest number of new recruits. An estimated 100,000 new Jobs are expected to be added in 2007, and additionally around 1,25,000 for the BPO and outsourcing services. Plus there will be additional hiring to replace industry attrition that is around 25 per cent. Besides the voice-based IT-enabled jobs and backroom outsourcing, the demand at the top end of the IT industry is also rising. According to Nasscom and Evalueserve by 2010, 300,000 jobs will be created in the KPO space and 70 per cent of these jobs are expected to come to India. This means there will be a need for technical architects, functional ERP professionals, semiconductor and chip design engineers, as well as those qualified in financial research, legal research, bio-informatics, tax processing and insurance work. Gaming and animation is another huge area being outsourced to India from the USA. So huge, that sensing the potential the Reliance Anil Dhirubhai Ambani Group has set up Zapak Digital Entertainment Ltd a full-service Gaming Entertainment Company handling exclusive game content, both international and Indian. It won’t be long before many other companies jump onto this multi-media bandwagon. And not only games on computers, but even on mobile phones with Bharati Airtel and other players getting into the act. Along with gaming is the increasing demand for quality entertainment. Not only are television channels multiplying, FM radio is back on the scene. Delhi NCR already boasts of nine FM channels, Mumbai has around six, Srinagar has one too, and many more are mushrooming in different parts of the country. Companies like Reliance — always ready for new business opportunities — and the Dainik Jagran group are setting up 17 and 15 FM channels, respectively. Each TV and radio channel requires producers, directors, editors, sound engineers, performers, scriptwriters, RJs, VJs, lighting technicians and so on. While watching TV and radio don’t miss out on the news on the new SEZs that continue to stir up heat and dust, along with real estate prices. This is certainly the scene for the big bucks as property prices soar skyhigh and real estate developers scout around for trained professionals. With the FDI coming into the business, the real estate industry is growing at the rate of 30-40 per cent, and again needs people at all levels. Another job boom will be in its banking, financial services and insurance (BFSI) sector. And the bulk of the action is likely to happen away from the country’s metros, in tier 2 and tier 3 cities. In fact, the trend has already begun and is expected to last for another year or more. Headhunters predict that 150,000 jobs will be created in this area in the private sector alone over the next 12 months. The latest Ma Foi Employment Tracker Survey (METS) reveals that 140,000 new jobs will be created in the BFSI segment in 2007, 18 per cent more than in 2006. Again, much of this is in the smaller cities. Banks have positioned themselves as one-stop shops selling deposit products, loans, credit cards, debit cards, depository (custody services), investment advice, bill payments and various transactional services, apart from third-party products such as mutual funds and insurance to retail customers. So most of the hiring is at the junior and entry level, for ‘foot soldiers’ — sales reps to sell mutual funds, personal loans, credit cards, insurance and fixed deposits. Industry estimates suggest that the rate of growth of new job creation in the BFSI space will increase from 10 per cent in 2007-08 to 12 per cent in 2010-11 and further to 15 per cent in 2013-14. The continued growth of this sector and the rising capital markets have also enhanced prospects for those working in the financial services. Fund management is today among the hottest professions these days. Another sector feeling the pinch of available manpower is the hospitality and aviation industry. Hotels of all kinds immediately need almost 15,000 trained professionals. With the huge growth in domestic tourism and the steady inflow of around 3 million international tourists leading up to the Commonwealth Games in 2010, there is a demand for qualified chefs, F&B and housekeeping managers, as well as airline flying and cabin crew. With so many companies starting new airlines, it is also probably the best time to take wing and fly!So many opportunities, but one thorn in this rosy picture — the dearth of skilled manpower with a strong knowledge base. According to McKinsey, apart from Mumbai, Delhi and Bangalore, the quality of graduates applying for jobs in all sectors of industry needs to improve. India produces over 100,000 graduates every year, but the majority are unemployable. Education, another area where the jobs are in demand, requires teachers and educators for schools, colleges and professional institutes to provide the skills that can make the new jobs worthwhile. So 2007 can mean a good year for those willing and able to cash in on the huge opportunities in the Indian job market.source: Tribune India. Author:Usha Albuquerque

The multiplex boom sweeps India

India’s multiplex bandwagon has gone beyond the metros to redefine entertainment in B and C class towns. “While the first phase (of the multiplex story) saw emergence of multiplexes in metros and now this growth is spreading to Tier 2 and 3 cities like Lucknow, Indore, Nasik, Aurangabad, Kanpur, Amritsar and so on,” says Ajay Bijli, managing director, PVR Cinemas. And PVR is not alone.

Other top multiplex players like Adlabs Films (where Anil Ambani holds a 51% stake), Inox Leisures, Shringar Cinemas (Fame multiplexes), Fun Multiplex (of Essel group) and Cinemax India too have ventured to small towns across the country from Darjeeling to Mangalore to Ghaziabad to Pimpri to Pune to Panipat to Allahabad to Indore to Latur to Agra to Thane to Lucknow to Hyderabad to Nasik to Jaipur to Visakhapatnam.

Projects are under way in places like Kochi, Bhatinda, Coimbatore, Kota, Madurai and Ambala. “Metro or non metro, if a town has a population of more than 10 lakh (1 million) people, we are interested,” says Alok Tandon, chief operating officer, Inox.

“About 38 cities in India would qualify for that,” he adds. “Given that there is little or no means of entertainment in B and C class towns, there is a huge potential for multiplexes,” says Devang Sampat, general manager, marketing, Cinemax.

The rising prominence of smaller towns can be gauged from the fact that movie stars are now touching down at these places to promote their films. If Aamir Khan was in Thane, a suburb of Mumbai, for the release of Rang de Basanti, more recently Amrita Rao was in Nasik for the release of Vivaah.

“After two years, non metros will clearly be the drivers for film exhibition companies,” says a foreign fund manager, who owns and tracks multiplex stocks. “With box office collections from non metros, expected to move up one cannot ignore the smaller towns.”

At present, as much as 65% of the total box office collections in the country come from non metros, says Sampat of Cinemax. “We see this changing to 30:70 metro-non metro in three-to-five years,” he adds.

Look at their plans. PVR, which raised almost Rs 128 crore (Rs 1.28 billion) last December through its initial public offering, has gone for a new brand, PVR Talkies, to foray into smaller places.

PVR Talkies plans to enter 70 cities — including Khanna, Jalandhar, Amritsar and Moradabad — over the next three-to-five years. Adlabs, which says it would invest

Rs 200 crore (Rs 2 billion) over the next three years, is eyeing places like Hyderabad, Delhi and NCR, Agra, Jalandhar, Ludhiana, Indore and Allahabad.

Inox, which has entered into a share swap deal to take over Calcutta Cene Pvt Ltd (CCPL) — known for its multiplex brand 89 Cinema — already has multiplexes in smaller places like Vadodara, Darjeeling, Goa, Indore, Jaipur, Kota, Nagpur and Pune.

Its theatres are coming up at Chennai, Hyderabad, Jodhpur, Raipur, Lucknow, Nagpur, Kharagpur, Borivali, Pune and Vijayawada. Further, the CCPL merger will bring in nine multiplexes in West Bengal and Assam to its fold. Similarly, Shringar — already operating in Kandivali, Surat, Nasik and Pimpri — is taking its Fame to places like Aurangabad and Thane.

Pricing It Right

As in metros, in smaller towns too it is the retail boom that’s mostly driving the multiplex story. Mall developers all over the country are wooing multiplexes to occupy their top floors as anchor tenants who would ensure footfalls.

“The arrival of the mall syndrome has accelerated the growth of cineplexes as multiplexes are the anchor tenants in most of these malls,” says Shravan Shroff, managing director, Shringar Cinemas.

But the game is slightly different here from that in metros. For one, multiplexes are forced to price their tickets lower as affordability levels are lower in smaller cities.

“Customers in these towns would not have the capacity to pay upwards of Rs 100 for a ticket, hence we have entered these towns under a separate brand name of PVR Talkies,” says Ashish Shukla, chief executive officer, PVR Talkies.

Cinemax, for example, has priced its tickets at less than Rs 100 in Nashik, while in its Mumbai property the average ticket price is Rs 150. Also, revenues from food and beverages (F&B) and advertisements are lower in smaller towns.

According to Sampat of Cinemax, F&B revenue constitute 15-20% in non-metros compared to 20-25% in metros. “While ad revenue in metros would be 10%, non metros would yield 5%,” he adds. “Since my margins in food and beverages are as high as 65%, lower F&B revenues from the segment, would delay my break even in B and C class cities,” murmurs a multiplex operator who doesn’t want to be named.

Industry watchers feel this will change. “Over time, F&B and ad revenues from non metros would match the metros,” says Chintan Mewar, analyst at Almondz Securities. Also, the consumer preferences are different. If hotdogs and popcorn are popular in the metros and semi-metros, in smaller towns, people would rather go for the traditional samosas and vada paavs.

To make up for lower revenues, exhibitors are entering the B and C towns without some of the frills they offer in metros. For example, while Cinemax offers reclining chairs in Versova, Mumbai the chairs are simpler in Nashik. PVR has an air-cooled lobby in Latur, while the lobbies in its metro properties are air-conditioned. But they won’t call it cost cutting. “The ambience is adjusted to the local environment,” as per PVR’s Shukla.

Farewell, Single Screen

So what if multiplexes constitute just 1% of the total number of cinema halls, and 4-5% of the 12,900 screens, in India, the industry is talking about the end of single screens. Single screens, with their low quality ambience, would find it tough to survive in the long run, it is felt.

“Over a period of time, theatres will die a natural death,” says Sampat. This because there is a rising demand for quality cinema exhibition infrastructure. Also, before long, digitisation will be the industry standard and exhibitors will have to shift to it.

“Though the propensity to watch movies in India is high, there is a big gap in terms of quality-viewing experience between the metros and the smaller cities,” says Tushar Dhingra, chief operating officer, Adlabs.

In India, there are only 12 screens per million population compared to 117 screens per million in the US and more than 40 screens per million for European countries.

Now, what are the risks involved? Increasing property prices is a big concern, of course. But most multiplex owners have tied up properties for at least the next couple of years. Also, being the anchor tenants in a mall, they are always offered special rates by developers.

“Since we have signed up properties for the next two-to-three years, and get preferred rates as we are anchor tenant, we are not worried about the rise in property prices,” says Tandon of Inox. It’s the same for other top players as well. “One of our key focus areas is also expansion to smaller towns, with populations of up to five lakh (500,000). Property prices in these places have been comparatively stable, which makes us bullish on our plans for these cities,” says Bijli of PVR.

So, at least on the surface, there’s nothing much to stop the multiplex boom.

The coming of age of direct-to-home services like movie-on-demand and live gaming are unlikely to make the millions of Prabhus across a country of fanatic fans (have you heard of the temple named after South Indian actress Khushboo or about the guy who offered his pocket knife to an unarmed Amitabh Bachchan surrounded by villains and tore apart the screen in the process?) resist the first day-first show temptation of Bollywood.

Source: Outlook Business