Contributing towards the new knowledge based economy: KPO

The evolution and maturity of the Indian BPO sector that has given rise to yet another wave in the global outsourcing scenario: KPO or Knowledge Process Outsourcing.

In today’s knowledge era, following the footstep of BPO, KPO emerged as the next big outsourcing sector in the market and contributing heavily to the economy. KPO stands for Knowledge Process Outsourcing. KPO includes processes that demand advanced information search, analytical, interpretation and technical skills as well as some judgment and decision-making. The KPO can be considered as one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping into Knowledge Process Outsourcing because of its favorable advantageous and future scope. But, it’s not a 'B' replaced by a 'K'. In fact, Knowledge process can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. And when this activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing. One can call it a high-end activity, which is likely to boom in coming years. There is a huge potential in this field of knowledge.
The whole concept of KPO is information driven. It means that it is a continuous process of creation and dissemination of information by bringing together the information industry leaders to create knowledge and see meaning in information and its context. The KPO typically involves a component of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). KPO business entities provide typical domain-based processes, advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is handling more amount of high skilled work other than the BPO Industry. While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency.
Fields of work that the KPO industry focuses on include intellectual property or patent research, content development, R&D in pharmaceuticals and biotechnology, market research, equity research, data research, database creation, analytical services, financial modeling, design and development in automotive and aerospace industries, animation and simulation, medical content and services, remote education, publishing and legal support. MBAs, PhDs, engineers, doctors, lawyers and other specialists are expected to be much in demand.
Most low-level BPO jobs provide support for an organization's core competencies and entry-level prerequisites are simply a command of English (or applicable language) and basic computer skills. Knowledge process outsourcing jobs, in comparison, are typically integrated with an organization's core competencies. The jobs involve more complex tasks and may require an advanced degree and/or certification. Examples of KPO include accounting, market and legal research, Web design and content creation.
The success achieved by many overseas companies in outsourcing business process operations to India has encouraged many of the said companies to start outsourcing their high-end knowledge work as well. Cost savings, operational efficiencies, availability of and access to a highly skilled and talented workforce and improved quality are all underlying expectations in outsourcing high-end processes to India. The success in outsourcing business process operations to India has encouraged many firms to start outsourcing their high-end knowledge work as well. Cost savings, operational efficiencies, access to a highly talented workforce and improved quality are all underlying expectations in offshoring high-end processes to India.
KPO delivers high value to organizations by providing domain-based processes and business expertise rather than just process expertise. These processes demand advanced analytical and specialized skill of knowledge workers that have domain experience to their credit. Therefore outsourcing of knowledge processes face more challenges than BPO (Business Process Outsourcing). Some of the challenges involved in KPO will be maintaining higher quality standards, investment in KPO infrastructure, the lack of talent pool, requirement of higher level of control, confidentiality and enhanced risk management. Comparing these challenges with the Indian IT and ITES service providers, it is not surprising that India has been ranked the most preferred KPO outsourcing destination owing to the country's large talent pool, quality IT training, friendly government policies and low labor costs.
Even the Indian government has recognized that knowledge processes will influence economic development extensively in the future & has taken remarkable measures towards liberalization and deregulation. Recent reforms have reduced licensing requirements, made foreign technology accessible, removed restrictions on investment and made the process of investment much easier. The government has been continuously improving infrastructure with better roads, setting up technology parks, opening up telecom for enhanced connectivity, providing uninterrupted power to augment growth.
The last five years have seen vast development in Knowledge Parks, with infrastructure of global standards, in cities like Chennai, Bangalore and Gurgaon. Multitenanted ‘intelligent’ buildings, builtto- suit facilities, sprawling campuses are tailor made to suit customer requirements.
Knowledge Process Outsourcing has proven to be a blessing in disguise to efficiently increase productivity and increase cost savings in the area of market research. Organizations are adopting outsourcing to meet their market research needs and the trend is all set to take the global market research industry by storm. India's intellectual potential is the key factor for India being the favored destination for KPO industry.
A major reason why companies in India will have no option but to move up the value chain from BPO to KPO is quite simple. By 2010, India may have become too costly to provide low-end services at competitive costs. For example, Evalueserve says Indian salaries have increased at an average of 14 per cent a year. The number of professionals working in the offshore industry is expected to increase as more and more companies decide to become involved in BPO and KPO. This will further drive the trend towards the migration of low-end services to high-end services, especially as offshore service vendors (as well as professionals working in this sector) gain experience and capabilities to provide high-value services.
The future of the KPO is very bright. Surveys have shown that the global KPO industry is expected to reach nearly 17 billion dollars by the end of 2010, of which approximately 12 billion dollars worth of business will be outsourced to India. What’s more, the Indian KPO industry is expected to employ an added figure of roughly 250,000 KPO professionals by the end of 2010, as compared to the current estimated figure of 25,000 employees. Predictions have been made that India will acquire nearly 70 percent of the KPO outsourcing sector and it has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research etc.