KNOWLEDGE PROCESS OUTSOURCING

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
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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

and analysis based on skills experience and judgment. The

KRI

s new opportunities in the Global Market which are

Engineering and Design

R&D (Excl. Biotech, Pharma & VLSI) Remote education Publishing and

12% 12%

18%

Animation and Simulation Services (Incl. Analytics) Others

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.

Key Growth Driver

An organization while going to Outsourcing market consider several factors as to determine which of their critical, high-end and strategic functions can be performed in an outsource environment. These factors are considered as a Key Growth Drivers of KPO. A. Ease of Process Portability : KPO processes are

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

Issues : As KPO begins to

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

lay KPO fir

s : Includes established IT/BPO

players that are expanding their offering to include KPO.

Opportunities for CAs in KPO

The works to be performed in the KPO industry is of a specialized nature and require knowledge expertise. Chartered Accountants with considerable exposure to trade and industry together with accounting and auditing hold an advantage over professionals from different backgrounds. KPO is a sort of management consultancy; a field where CAs have strong and established expertise. The Ideal KPO employee should be domain specialists, possess a high level of conceptulisation, have the aptitude to manage different database systems and be research-oriented. Additionally, the employee must hold a professional degree. Chartered Accountants possess these qualities and together with their natural flair for mathematics and research, they are ideal candidates to be a vital part of the KPO boom in India. Ty es of KPO services 1. 2. Legal Services Preparation authorities 3. 4. 5. Investment research Assets Record keeping & verification Taxation Consultancy
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rovided by CAs:

and

filing

various

forms

with

legal

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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

Challenges before KPO:

Even though points mentioned above make KPO businesses a lucrative option for qualified personnel to work in, there are many grey patches that recruiters have to go through. As KPOs deliver high value services to organisations by providing domain-based processes and business expertise, it is not easy to become a strong KPO power. There are many risk factors that KPO organisations face. y They require higher quality standards. y KPOs are more advanced and have costly infrastructure. y They are likely to require higher amounts of capital. y They face lack of a good talent pool. y They require a higher level of control, confidentiality and enhanced risk management.

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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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