Saturday, July 16, 2005

Knowledge Process Outsourcing [ KPO ]

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

India's intellectual potential

The myth that Indian companies can only provide “software coolies” is soon changing to the reality of Indian companies being capable of almost anything, even rocket science! India has a large pool of knowledge workers in various sectors ranging from Pharmacy, Medicine, Law, Biotechnology, Education & Training, Engineering, Analytics, Design & Animation, Research & Development, Paralegal Content and even Intelligence services.
This talent is soon being discovered and tapped by leading businesses across the globe resulting in the outsourcing of high-end processes to low-wage destinations. Hence Knowledge Process Outsourcing involves offshoring of knowledge intensive business processes that require specialized domain expertise.

The future of KPO

According to a report by GlobalSourcingNow, the Global Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India . In addition, the Indian KPO sector is also expected to employ more than 250,000 KPO professionals by 2010, compared with the current figure of 25,000 employees. A report by Evalueserve predicts that India will capture more than 70 percent of the KPO sector by 2010. Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also expected to join the KPO industry.
Comparison of Opportunity in BPO and KPO markets Low-end outsourcing services have an expected Cumulative Annual Growth Rate (CAGR) of 26% by 2010. In contrast, the global KPO market is poised for an expected CAGR of 46% by 2010. The following figure demonstrates the expected growth in the BPO and KPO markets over the next seven years.




What high-end services can be outsourced to the Indian KPO sector?

Here are some KPO services that can be outsourced to India :
Research & Development
Business and Technical Analysis
Learning Solutions
Animation & Design
Business & Market Research
Pharmaceuticals and Biotechnology
Medical Services
Writing & Content Development
Legal Services
Intellectual Property (IP) Research
Data Analytics
Network Management
Training & Consultancy

The challenges in KPO

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 destination owing to the country's large talent pool, quality IT training, friendly government policies and low labor costs.
India is well equipped to meet this emerging sector's challenges and all set to be the global KPO hub!


[inputs from Outsource2india.com , eValueserve Survey on Global KPO Business 2004 and McKinsey Research]




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2 comments:

Sharad Saxena said...

After BPO it's KPO By Sharad Saxena

KPO or Knowledge Process Outsourcing is the new buzzword.

KPO promises to be the next big thing in the outsourcing sector. It's an estimate according to a report by (Global Sourcing)

KPO or Knowledge Process Outsourcing business is supposed to touch $17 billion by 2010 of which at least 70 per cent or $12

billion is to be outsourced to India. More then 300,000 new jobs are required from the current 25,000. Many companies are

planning to develop KPO segment due to this. The impact of quality manpower and work helps India to receive this much of

work. According to a report, for every one job created for a foreign language professional, two new jobs will be created for

Indian English-speaking professionals.

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