Knowledge Process Outsourcing

Wall Street analysts beware: Your jobs could soon be outsourced.

That’s the message coming from Adventity, an India-based company that today will announce $20 million in VC funding led by Norwest Venture Partners. Well, Adventity doesn’t put it quite so ominously, but it’s hard to miss the implications of its sales pitch to corporation, I-banks and asset managers like private equity firms and hedge funds: Get high-quality research and analytics at a far lower cost than what you are accustomed to paying.

This is known as “knowledge process outsourcing,” a twist on the more commonly-discussed business process outsourcing. Promod Haque, managing partner of NVP and a new Adventiy board member, says that the business opportunity partially relates to the cost arbitrage, but also to the availability of talent: “What you find in the high-end research and analytics space is that many of the skill sets used are by folks with engineering degrees and MBAs – and that talent is more readily available in India than in the United States.”

I followed up by asking why such a person from India wouldn’t continue following the traditional path of spending a few years in New York to make his/her fortune, with plans of then returning home. After all, you can still make better salaries on Wall Street than working for Adventity in India. His answer was two-fold: First, there is the obvious tug of home/family, and an acceptance of trading off some cash for comfort. Second, and of equal import, is the fact that U.S. immigration laws have become increasingly prohibitive.
It also should be noted that Adventity is more than just a research shop, with significant interests in areas like transaction processing. More specifically, it hopes to use such business lines to generate in-country revenue – perhaps up to 20%.

“We want to become the [First Data Corp.] of India,” Haque says. He adds that Adventity should not require additional VC funding, save for possible acquisition capital.