A company that bills itself as the largest non-bank financial institution in India has launched a BPO unit.

Karvy this week unveiled KGS (Karvy Global Services Ltd.) as a subsidiary.

KGS will focus on finance and accounting BPO (business process outsourcing).

Services include accounts receivables and payables processing, financial reporting, transaction analysis, investment analysis and tax/audit services.

Karvy’s original business was financial consulting, but the company has branched into brokerage services, merchant banking and personal finance advisory services.

Karvy tapped Arthur Flew to head KGS. Flew was most recently a founding member of MphasiS’ BPO operation, according to a KGS spokesperson.

MphasiS provides finance and accounting BPO among other services.

The finance and accounting category ranks among the fastest growing BPO segments, according to Stan Lepeak, managing director of research at EquaTerra Inc., an outsourcing advisory firm.

He cited demand for transaction processing-oriented services such as accounts payable and accounts receivable and credit collection.

However, the practice of offshoring finance and accounting services “really hasn’t taken off yet,” added Lepeak, who cited complications surrounding issues such as compliance.

KGS runs three outsourcing centers in Hyderabad, India, where the subsidiary is based.

The company’s U.S. headquarters is in New York. In addition to finance and accounting BPO, the company also offers back-office processing for such industries as healthcare, human resources outsourcing, and helpdesk support.

Lepeak said KGS’ debut demonstrates that finance and accounting BPO are “becoming more prevalent and more mainstream.”

That said, Lepeak said he doesn’t expect a flood of financial players to enter the market. Indeed, Karvy’s entry runs counter to how U.S. companies with similar backgrounds treat outsourcing. Karvy was founded by chartered accountants, professionals parallel to certified public accountants in the United States

But while Karvy has decided to pursue BPO, U.S. firms with accounting in their backgrounds have opted to divest BPO units.

Earlier this year, Convergys Corp. purchased the finance and accounting BPO business of Deloitte Consulting’s Deloitte Consulting Outsourcing LLC subsidiary.

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“In the states and many countries in the West, you see the financial institutions that do audit work and accounting work divest themselves of outsourcing,” Lepeak said.

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