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What is this KPO? Is it typing error or a glorified abbreviation to replace BPO? KPO, i.e., Knowledge Process
Outsourcing" is nothing but the upward shift of BPO in the value chain. Where BPO focuses on process expertise, in KPO the focus is on knowledge expertise. Knowledge Process Outsourcing (KPO) is usually focused on knowledge-intensive business processes that
require significant domain expertise or in simple words, KPO is a form of outsourcing, in which knowledge-related and
information-related high value work is carried out by highly skilled staff in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. In this knowledge era, our success depends on what we know and what we do with what we know. KPO is a new industry with a high growth rate in India. Unlike conventional BPO which basically deals with technical support, transaction processing, customer care, telemarketing etc., in KPO the focus is on specialized domain expertise and for such tasks KPO requires people with a good educational background and experts in a particular field. KPO employee is
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expected to have better qualifications, skills and knowledge as compared to his/her BPO counterpart. KPO job is all about good money, better working hours and an opportunity to do research and technical consultancy. As more and more companies worldwide make the transition from BPO to KPO, India is fast becoming a hot destination due to cost. A knowledge worker plays vital role in it as in most cases client's has the data but not the manpower and India has the talent pool to process the data at a cheaper cost and with the Indian way of education which lays great emphasis on higher education & specialization, a talent pool with specialized knowledge in any field is readily available. KPO potential has been financial seen in data web integration, research,
management
services,
services,
technology research, biotech, data mining, database creation, web support, professional writing, website/graphic designing etc. It also includes professional services, like business
research, legal services, accounts services, financial analysis and management consulting. As per Nasscom estimates, the KPO industry is expected to grow by 45 per cent in 2010. Out of the $16 billion, which the KPO industry is likely to earn around $12 billion, would be outsourced from India. Indian KPO sector has increase its share in the Global KPO sector to 71% by 2010 from 56% in 2003. By the year 2010, several new KPO services would become prominent in the global offshoring space. Several major services provided by
KRISHNA KANT VYAS Page 2
KPO c
broadly categorized and presented through pie-chart with their respective share in Global Market.
KPO Opportunites
Data search, integration and Management (Incl. Financial Services) Biotech and pharma
9% 8% 29% 12%
Nature of KPO
1. Person an ju men - riven : KPO work requires insight
KRI
R&D (Excl. Biotech, Pharma & VLSI) Remote education Publishing and
12% 12%
18%
result and the recommendations are driven by judgment rather than by rule-driven processing. 2. Process can performed rovide a guideline : Processes/services are on skills, domain knowledge and
based
intellectual capability. A process can provide a guideline but not a deterministic set of rules. 3. Process is co lex : The process is complex, requiring
many steps. It calls for interpretation, analytical skills, reasoning and the exercise of judgment. 4. High level of skills required : It requires people with higher education and/or specialized and differentiated
knowledge and skills. 5. It is inclusive in nature : KPO is inclusive. Unlike BPO, where an entire process is offshored, KPO usually entails offshoring part of the larger process (e.g., financial research and analysis) by its very nature.
typically fragmented across geographies and business groups, and are difficult to disengage and cluster for
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porting
offshore.
Success
in
this
activity
requires
significant offshore experience and the deployment of rigorous methodologies. Just how well knowledge work can be divided into smaller, manageable segments will determine what can be performed and managed in an offshore environment.
B. Availability of Skills : It is not just the availability of skills at the global level but also the availability of differentiated skills in a specific location that is important. Also, as potential destination economies also grow, a number of industries will compete for the same talent to cater to their own domestic markets. C. Potential for Economies of Scale : A small section of the organizational pyramid performs high-end critical knowledge work and, because of this, KPO generally does not achieve the economies of scale of ITO and BPO in an offshored or outsourced environment.
KRI
D. Legal and
Licensing
penetrate traditional professions such as medicine, law, and accounting, the traditional barriers to entry under these professions have employed, will limit the extent of services that can be offshored. In some cases, there could even be licensing implications to processes being
offshored. E. Protecting Intellectual Pro erty Rights (IPR) : Many functions and processes, such as certain strategic
marketing ideas or financial functions, are core to the organization. For example, some proprietary databases, models, and algorithms in equity research would be critical to an organization. Therefore, protecting IPR would be one of the key considerations in offshoring knowledge functions.
Players in KPO
The KPO industry today consists of: y Ca tives : For functions closer to the enterprises core activity, the tendency will be to keep in-house activities that involve intellectual property and
sensitive data though notable exceptions exist. In an offshore model, they are more likely to use their own subsidiary (or captive) than rely on third-party outsourcers for high-end processes.
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y Pure
rovided by CAs:
and
filing
various
forms
with
legal
6. 7. 8. 9.
Credit appraisal of customers Evaluation of supply chain Business and Technical Analysis Business and Market Research
10. Intellectual Property (IP) Research 11. Data Analytics 12. Analysis of Management Information System 13. Network Management 14. Valuation and fairness opinions
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Conclusion:
There is a paradigm shift in the way businesses now think. Globalization is integral to doing business, and process
outsourcing is at the core of this shift. This fundamental shift in where work can be performed has been made possible by advancement in technology and international
telecommunications. Cost competitiveness and time-to-market have become directly linked with outsourcing and even more so with offshoring. This phenomenon has matured to the extent that
outsourcing is no longer simply about obtaining low-cost resources elsewhere; it is now about accessing specific types of talent and gaining entry points to serve new and broader markets. Global companies are now incorporating offshoring as part of their forward-looking strategies rather employing it as a knee-jerk reaction to cost pressures. Encouraged by the early success of outsourcing in the ITO and BPO sectors, companies are increasingly exploring the value of high-end processes outsourcing, i.e., KPO.
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