-KPO: An Overview

Knowledge Process Outsourcing (KPO) is one step ahead of Business Process Outsourcing (BPO). It started
emerging in India around the turn of the century, when the global industries realized that apart from
software development and technical support, knowledge work could also be outsourced. It involves
transfer of business processes to other geographic locations; specialized domain specific knowledge and
business expertise of a higher level rather than just process expertise.

The following are the areas associated with the KPO sector.

• Animation & Design

• Advanced Web Applications
• Business and Technical Analysis
• Business & Market Research
• Data Analytics
• Financial Consultancy and Services
• Intellectual Property (IP) Research
• Learning Solutions
• Legal Services
• Medical Services
• Network Management
• Pharmaceuticals and Biotechnology
• Research & Development
• Training & Consultancy
• Writing & Content Development

Many companies have started outsourcing their high-end processes like Market Research (MR), Equity
Research, Engineering Design, Intellectual Property Rights (IPR), Legal Services, Remote Education and
Publishing Operations to India after the success of BPOs. These companies outsource their processes to India
for:

• Cost savings
• Operational efficiencies
• Access to highly skilled workforce
• Improved quality

A KPO can provide quality work and on- time delivery with uninterrupted services. KPOs are the next big
thing in the outsourcing sector. Initially, KPOs focused on data collection, updating financial models, patent
searches and basic data mining. But now KPOs have also started focusing on sector insights, equity research,
patent analytics, high end data mining, analysis and recommendation. Some of the hot destinations for KPOs
other than India are Russia, China, Czech Republic, Ireland and Israel.

Difference between KPOs and BPOs: We can say that KPOs emerged from BPOs.

BPO KPO

• It provides services like customer care, • KPO provides in-depth knowledge,

technical support through voice processes, expertise and analysis on complex areas like
tele-marketing, sales, etc. Legal Services, Business & Market Research,
etc.
 • Low end services • High end services
• Process expertise • Knowledge expertise
• Pre-defined processes • Requires application, understanding of
business and analytical bent of mind
• It employees not- so- qualified workers • It involves skill and expertise of
as it focuses on communication skills knowledge workers with excellent educational
background.

KPO Sector Outlook

The share of Indian KPO sector was 56 percent of the global KPO sector in 2003. By 2010, Indian KPO sector
will have 71 percent share of the global KPO sector. Russia, Ireland, Philippines, China, Czech Republic and
Israel are also entering the KPO industry.

In 2003, USD 0.72 billion revenue was generated by the Indian KPO industry, contributing around 0.24 % to
the Indian service sector. This figure is expected to reach 1.78 % by 2010. A CAGR of 49.5 % is expected by
Indian KPO sector between 2003 and 2010.
As estimated, the BPO exports will be $20 billion and KPO exports will be $12 billion by 2010. The BPO
industry will grow globally at a CAGR of 26% and the KPO industry will grow globally at a CAGR of 44.5% till
2010.

Out of the $17 billion in KPO sector by 2010, the contribution of the 6 main sectors will be as shown above.

No of Employees:
The industry presently employees 25,000 people and is expected to grow to 250,000 employees by 2010, as
estimated by NASSCOM. But different research companies have different views about the number of
employees in this sector.

SWOT Analysis

Strengths Weaknesses

• Large talented pool • Immoral and unethical practices related to

• Quality IT training handling of crucial data
• Low labour costs
• Success of BPOs
• Rising wages
• Good knowledge of project management
skills
• Supportive government policies • The inability to uniformly develop and
• Many new areas of specialization are provide infrastructural requirements as real
being covered making KPO sector spreading its estate prices are rising in major cities.
wings
• Consideration to quality standards like ISO • Inadequate Intellectual Property Rights
900x and Six Sigma
(IPR) protection regime in India
• Billing rates are lower as compared to
billing rates in other countries
• Billing rates are higher as compared to
billing rates in BPOs
Opportunities Threats

• Increasing domain expertise • Non retention of talent

• More areas of specialization can be added • Expected labour supply gap as jobs grow
to KPOs faster than the workforce.

• Ample opportunities for SMEs

Classification
The KPO sector can be classified into 8 major segments:

• Legal Services: These include drafting contracts, reviewing transactional & litigation
documents, research memoranda & due diligence reports, negotiations, prosecuting patents, etc. Some of
the KPOs working in this area are Wipro, Pangea3, Atlas Legal, Manthan Services, etc.

• Financial Services: These include financial data mining, insurance, risk assessment, equity
research, underwriting, fund management, actuarial analytics, debt collection and recovery, corporate &
market research, etc. Some of the KPOs working in this area are Smart Analyst, Office Tiger, The Smart
Cube.

• Engineering and R&D: These include finite analysis, 3D conversion and modeling, technical
specifications for tenders, value engineering, computational fluid dynamics analysis, etc. Some of the areas
and KPOs working in these areas are:
o Telecom R&D: Qualcomm, Nokia, Lucent Technologies, Alcatel, Ericsson.
o Software R&D: Phillips, Microsoft, Baan, Adobe, SAP Labs, BMC Software, IBM, Yahoo, HP,
Sun MicrosysteAuto/Engineeringms, Google.
o Auto/Engineering: Neilsoft, Delphi, General Motors, DaimlerChrysler, Plexion, Quest,
Whirlpool.

• Market Research and Analytics: These include services like writing & editing, secondary &
primary research, formatting client reports, conversion of findings to knowledge, etc. Some of the KPOs
working in this area are marketRx, Pipal Research, Evalueserve, Inductis, OfficeTiger, Copal Partners, CRISIL,
etc.

• Writing and Content Development: These include services like content delivery, digitization of
content, data enrichment & warehousing, pre-press work, proofreading, template designing, text
composition, etc.

• Pharmaceutical and Biotech R&D: These include clinical research, research & development,
drug discovery, etc. Some of the KPOs working in this area are Bayer, GlaxoSmithKline, Biocon, Eli Lilly,
AstraZeneca, Dr. Path Labs, etc.

• Healthcare Services: These include diagnostic, genetic profiling, oncology tests, HIV & allergy,
etc. Some of the KPOs working in this area are Clingene, Avesthagen, Ranbaxy.
 • Education and Training: These include private tutorials, curriculum design, K-12, teaching,
content development, etc.

Scope of KPO Sector

KPOs have evolved from BPOs. KPOs were introduced in india by McKinsey when it first set up
a knowledge center in india in 1987. But KPOs actually started coming up in India in 2000
when many companies like OfficeTiger, GE, Gartner, etc opened their research centers
here. From 2000 to 2005, KPOs were in their growing stage. And during this duration,
India became a leading destination for KPOs.

Let us have a look at the current status of the KPO sector in India.

Current Scenario
"Indian companies are good for BPO only." The companies in KPO sector are proving this statement to be
wrong. They are showing the world that Indian companies can handle complex work also. India has highly
qualified workers in many sectors like Engineering, Pharmacy, R&D, Biotechnology, etc.

KPO jobs are more challenging than BPO jobs because other than process expertise, KPO provides domain
knowledge and business expertise, which, in turn, require analytical and highly specialized skills. India is
the hottest destination for KPOs.

India is emerging as a leader in KPO market because of the following reasons:

• Well established IT services and BPO sector

• Excellent project management skills
• Highly qualified professionals
• Proficiency in English
• Supporting government policies

Some challenges which KPO industry is facing are as following:

• Expected dearth of domain expert professionals

• High attrition rates
• Talent retention
• Data security and confidentiality

Growth drivers of KPO sector:

• Shortage of knowledge professionals in countries like USA, UK, etc.

• Low wages labour
• BPOs moving up the value chain
• Single vendor services
• Talented workforce

After the success of BPOs, India will be a key player in this sector. India is all set to face challenges and
become a global KPO leader.

Future Scenario
The future of KPOs in India is bright. Along with creating job opportunities for talented engineers, MBAs,
doctors, lawyers and other professionals, the sector is spreading its wings into different directions which
will finally lead to the development of India.

KPO salaries will be 25-50% higher than those in other fields.

Billing rates for KPOs are higher as compared to BPOs. But billing rates in India are much less than those in
UK or US for KPOs. This makes India save more money and generate more revenue.

Continuous growth is expected in KPO sector in the future as new areas are being added to the existing list
of areas of specialization.

In 2003, the market share of Indian KPO sector in global KPO market was 56%. And it is expected to reach
71% in 2010, which shows a decent growth of the sector in the coming years. According to NASSCOM, KPO
sector worldwide is expected to reach USD 17 billion by 2010. Out of this, India will account for USD 12
billion.

According to Evalueserve, KPO sector is expected to grow at a CAGR of 46 per cent globally. This is possible
as India has the potential to provide cost-effective and quality workforce.

Hurdles in Growth

 Low employability despite high graduate turnout because it requires high level skills.
 Job opportunities in other sectors are also increasing, thereby further reducing the supply of skilled
people to the KPO sector.
 Supply gap: According to Rocsearch, a UK based Research Company, the KPO sector may only reach $5
billion by 2010 and 100,000 employees instead of projections of $12 billion market and 250,000 employees.
In the near future, India will experience a higher rate of growth in KPOs as compared to BPOs. KPO sector will
heavily contribute to the revenue generation and job creation due to its increasing size. Therefore it has a
promising future.

Top Players in KPO

Sector
S. No. Companies

1. Evalueserve (EVS)

2. McKinsey & Company

3. RocSearch

4. Pangea3

5. OfficeTiger

6 Copal Partners

7. Gevity

8. Pipal Research

9. Grail Research

10. Inductis, EXL Service

11. WNS GLOBAL SERVICES

12. ACCENTURE

13. APTARA (TECHBOOKS)

Career Opportunities
KPO sector is growing and so are the job opportunities in this sector. With introduction of new areas of
specializations in the sector, job opportunities have also increased. And India has the capability of fulfilling
this need of the KPO sector.

KPO prefers employees from diverse academic backgrounds. It helps in getting different perspectives for
delivering quality work to the clients. There will be a strong requirement of engineers, CAs, doctors, MBAs,
lawyers, research analysts, scientific researchers and Ph.Ds in the near future. In-depth domain knowledge
 is a must for working in a KPO. One can make full use of his/her educational qualifications in a KPO.

Since the number of skilled people is less, good performers have tremendous opportunity for growth in
salary package, domain knowledge, managerial responsibilities and abilities, client interaction, etc.

KPO is a quick-money sector and provides long-term jobs as well. Well-educated, knowledgeable, analytical
and deserving candidates can make handsome money in this sector, far more than what is being paid in the
BPO sector. Unlike BPO, a temporary enumerative option, professionals are taking KPO industry as a long-
term career option.

Skills KPOs are looking for:

• Analytical skills for analyzing data.

• Usage of resources for information research
• Making presentable reports from raw data
• Theoretical and conceptualization knowledge
• Computer proficiency (software and hardware devices)
• English Speaking

On the other hand, workforce requirement may rise and fall in KPOs as the work is project based. Employee
retention and job insecurity among employees are also major issues.

KPOs are the best place to work if a person has zeal to learn, commitment and positive attitude towards
work.

To know the qualifications required to enter and survive in a KPO, click on the link.

Qualifications
There is no particular qualification required as such to work in a KPO. Some of the preferred professional
categories and the qualifications associated with them as per the industry's recruitment trends for entering
the KPO sector are:

• MBAs (HR, IT, Finance, Marketing, IB, etc )

• Doctors ( MBBS)
• Engineers (B. E., B. Tech, M. Tech)
• Lawyers (LLB)
• Teachers (B. Ed)
• Chartered Accountants
• Economists
• Architects

• Journalists

People with science background have a better chance as they have a flair for mathematics, science and
research. People with good educational background, analytical abilities, command over English and IT
acumen can look forward to a bright career in KPOs. So basically, the key competencies required are:

• Domain knowledge
• Basic interest in the field of work
• Aptitude for working with data and information
• Good communication skills

• Team work

KPO Asia 2007

KPO Asia 2007 was a two day event in which the renowned providers of KPO services presented their
outsourcing and offshoring skills and solutions. Asia's most experienced outsourcing service provider,
Beyondsoft Group, sponsored this conference. It was held in Singapore on 13th and 14th June. CEOs and
CIOs of various organizations attended the summit. More than 200 participants attended this summit. It
was first of its kind in KPO industry in the Asia-Pacific region. It focused on knowledge services in KPO
sector. This was a great opportunity for outsourcing professionals to make others understand the emerging
trends and innovations in KPO sector. It saved a lot of time and money which would have been wasted in
evaluating the KPO service providers otherwise.

KPO Asia 2007 discussed:

• The challenges and prospects of shifting from BPO to KPO

• The outsourcing and offshoring options available in Asia.
• Best practices for getting desirable results.
• Evaluation of outsourcing and offshoring destinations in Asia (India, Singapore, Malaysia, Philippines
and China)

The content displayed in the exhibition was thoroughly researched so that it could attract the right people
whom the general public would like to meet. These people from the industry had raw knowledge of the KPO
industry. KPO Asia 2007 helped participants in many ways like:

• Taking leadership positions in KPOs

• To use the cost effective and wide marketing network in Asia
• Developing relationships through this network
• To access the global movers and shakers in outsourcing
• Increase brand recognition
• New partnerships and alliances
• Demonstrate products and solutions to audience
• Better understanding the KPO market

• Face-to-face meetings with various industry experts

umbers bit too outstretched

It was estimated that the KPO industry will have a CAGR of 80%-90% i.e. $ 12 billion by 2010. But there is
a possibility that the Indian knowledge process outsourcing (KPO) market will not be able to touch the
projected $ 12 billion by 2010. The projected figure is not easily achievable. This is because the
organizations are still doing selective outsourcing.
 The growth in KPO market is more than the growth in IT/BPO market. Reasons being:

• Many companies are not comfortable in outsourcing work to third parties. They prefer to do it
themselves.

• There are so many entry barriers for professionals who are experts in KPO segment.

If $ 20 per hour is charged (which is the minimum fee being charged) then only $ 8 billion can be achieved
by 2010 but not $ 12 billion. KPOs are growing at a fast rate, but how fast? - this is difficult to find out.

Whereas a recent Evalueserve report says that the KPO industry is doing pretty well and will soon achieve
the targets set. It also says that till 2010 KPO industry will start following the vendor model (buy) instead of
captive model (make). Also dual outsourcing will increase, i.e. outsourcing work to captives plus external
vendors.

But irrespective of the debate, companies are outsourcing non core activities like accrual services, equity
research, treasury operations, credit decision processes, etc.