Knowledge Process Outsourcing: is the Sector Ready for the Change

KPO


Introduction:

KPO as the name signifies is having its focus on the knowledge based expert services as compared to BPO which is solely based on the process expertise rest on the standards based routine process including the data entry work. Knowledge Process Outsourcing in the simplest words can be stated as the upward shift of BPO in the value chain. It is consisted of the high-end services of the Business Process Outsourcing (BPO) industry which are expected to have a bright future worldwide. KPO provides a shift from the existing low end services of BPO towards a world of more analytical, technical and advance services. KPO industry is expected to work grow at a magnificent rate in the coming years.

Where, BPO talks about completion of high volume of work in a given time with maximum rate of efficiency and yielding of maximum profit for the organization with the low end services. KPO stands with the operations that require highly creative and learned expertise who have the judgmental decision making power and acquire depth knowledge about the specialized area. KPO industry is consisted of high skilled expertises that perform the work on typical domain based processes and yield high level results with maximum customer satisfaction.

KPO has emerged due to the competitive advantage of BPO sector and its overwhelming success rate worldwide. Due to the low cost, operational efficiency and talented workforce, India is consistently making itself a leader in the BPO services, as a result of the tremendous success rate of BPO, many overseas organizations have decided to shift themselves further from low-end services to high-end services through which more profit can be earned and more customer base can be satisfied.

There is a high probability rate of the success of KPO in India as many organizations have come to the conclusion that it is more beneficial for them to outsource the non-core services and concentrate on the core competency services only. These non- core services will provide a huge market for the organizations dealing in the outsourcing activities as a large number of companies have invited applications for the outsourcing and yet many other are in the lieu.



Scope of KPO:

According to a report of National Association of Software and Services Companies (NASSCOM), the Indian chamber of commerce that serves as an interface to the Indian Software industry, Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India.

According to a recent study by “Evalueserve (a Gurgaon based outsourcing company) having service chart for global world”, the global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent, from $1.2 billion in 2003 to $17 billion in 2010. Compare this with the prediction for the low-end outsourcing services market. This is expected to have a CAGR of 26 per cent, from $ 7.7 billion to $39.8 billion in the same period. Evalueserve says India provided $3.5 billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of 36 per cent during 2004 to 2010. Hence, it is likely to earn $30 billion in 2010 by providing these services.

According to Evalueserve, the KPO industry in India had only 9,000 billable professionals in India, generating revenue of 260 million dollars during 2000-01. This number has grown to 75,400 by 2006-07 with 3.05 billion dollars in revenue at an annual growth rate of 51 per cent.

The anticipated success in KPO comes after the success of Business Process Outsourcing (BPO) in the country, which accounts for revenues of 15.8 billion dollar in 2006-07, a jump from just 7.7 billion dollar in 2003-04.

Another report 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.

According to Achal Khanna (Country General Manager), Kelly Services, “India still maintains the competitive advantage for providing, the combination of the most cost-effective and high quality manpower- this is India's strength in the off-shoring business”.

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.


Services which can be outsourced through KPO are:

There are a variety of high end services which can be outsourced through the use of the KPO, all these activities includes a high degree of expertise, intellectualness and technical efficiency. Some of them can be listed as follows:

1. Biotech services.
2. Medical services.
3. Technical analysis services.
4. Market research and interpretation services
5. Services of creative writers.
6. Intellectual Property research services.
7. Data recording with advance analysis services.
8. 3-D animation related services.
9. In-house Research and development services.
10. Pharmaceutical related services.
11. Legal services.
12. Legal advice and solution cell services.
13. Training related services.
14. Consultancy services.
15. Recruitment and selection related services.


Challenges faced by KPO Industry:

KPO attracts the eyes of the organizations but at the same it comprises of certain problems also. KPO faces certain challenges which are a serious concern for the future period as they can distract the normal pace functioning of the organizations and hinder in providing the high end customer services to the end customer. The challenges which are faced by the KPO industry are as follows:

a) Rise in the standards of quality:
With the emergence of KPO’s there emerges requirement of high quality standards of work. BPO are based on the systematic routine working which have set procedures to be followed and have proper set of guidelines of work, whereas in KPO’s expertise work is done which is based on experience, intellectual capacity and analytical skills with combination of technical knowledge. All these factors together make the quality standards tough and difficult to be followed.

b) Lack of required talented employees:
KPO also faces the problem of having low rate of talented employee’s pool because of which the services can not be completed within the desired time and with expected efficiency. Unlike BPO, where the jobs are routine in nature and average intelligence level is required, KPO requires high degree of expertise to provide high end services to the customers.

c) Maintaining higher degree of confidentiality:
KPO maintains high degree of confidentiality as there work is much more sophisticated and confidential in nature as compared to that of BPO’s. KPO’s have to maintain the desired level of confidentiality and is also expected to provide superior quality services as compared to their counterparts.

d) Rise in the investment in KPO infrastructure:
With the evolution of KPO, the investment pattern has also risen up. KPO serves high end services for which the infrastructure requirement differs as compared to the infrastructure required for the BPO. For KPO, high level investment in infrastructure is required through which the services can be provided on the base line of the set standards.



Companies actively participating in KPO based activities (In India):

In India, there are a large number of organizations who are dealing in KPO related activities. These organizations are active KPO service providers in the market and are providing the high end services with the help of the experienced expertise. Some of the organizations which are dealing in the KPO sector (In India) are:

a) ICICI OneSource.
b) EXL Services.
c) TechBooks.
d) Genpact.
e) Evalueserve.
f) 24/7 Customer.
g) Copal Partners.

All these organizations are dealing the KPO related activities through which they are providing high end services to the customers. These companies are generating a huge amount of revenue from these services and are dealing with national and international clients.


Reasons of INDIA to be the most preferred location:

India is always taken as one of the biggest challenger in the world market for providing the BPO services. There are many reasons for India to be a strong contender in the world of outsourcing services. Moving ahead in the path, KPO emerges as the specialized branch of BPO where only a certain degree of specialized services will be provided and the high end services will be considered to be served. India is again seen as one of the most preferred location due to its competitive advantage over rest of the countries. Some of the reasons for India to be signified as one of the most preferred location are:

• High rate of Expertise Pool.
• Cost Advantage (Compared to other countries).
• Accent clarity and English Proficiency.
• Flexible Time Horizons.
• High Computer Literacy Rate.
• High rate of (selected) Domain Specialization.
• High rate of professional graduates (especially Science and Mathematics).
• Attractive Location.

A survey predicts that that the Indian KPO market will grow about 49 per cent by 2010(While the BPO sector is slated to grow 30.6 per cent). At present, around 25,000 professionals are employed in the KPO industry. The figure is expected to shoot up to 2.5 lakh by 2010.
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.
*Source: www.naukrihub.com


Reasons for shift towards KPO:

There are many reasons with the youth of the country to shift from the traditional jobs to the new sector KPO. KPO are not only providing the opportunity for growth but at the same time are also satisfying the inner urge of the youth to serve something creative in their field and show their talent to the world while earning a high rate of perks. Some of the reasons because of which there is a swift shift from traditional jobs to the KPO’s are:

? High rate of monetary benefits.
? Highly skilled expertise service requirement.
? Space for Innovativeness.
? High rate of freedom to perform the operations.
? Highly recognized brands associated.
? Flexibility in work completion.
? More research and analytical work associated.
? Non-traditional lines of procedural guidelines.
? Absorbs a large number of graduates.
? Higher degree of knowledge involvement with creativity.


Beside all other benefits, one of the strongest benefits attached with the KPO’s are the monetary benefits. This can be clearer with the statement of Mr. Rohit Dogra, assistant vice-president, analytics at Evalueserve: “Fresh doctors and lawyers take home a cool Rs. 6-8 lakh salary package at KPOs. MBAs from non-IIM institutes take home Rs 3-5 lakh per annum. The yearly package for fresh IIM grads is certainly higher at Rs 4-6 lakh p.a. obviously it shoots up for candidates with domain experience.”

A fresh MBBS or lawyer earns Rs 1.5 lakh annually; whereas a KPO offers much more, almost 500 per cent more as compared to rest. This gives a clear indication that the KPO is regarded as one of the most favorable destination for the youth of today as in 21st century everyone will like to add in their accounts more wealth (with added advantage of having more space for creativity and innovativeness).


Bibliography:


Articles:

• Paramita Dhar, Knowledge Process Outsourcing: Is India Prepared for It?, HRM Review: The ICFAI University Press, November 2006.


Newspaper Articles:

• “KPO market on the rise in India” : The Economic Times: December 29, 2005
• “KPO sector to be $11.2b by '10-11” : TNN: September 10, 2007



Websites:

• www.kpoexperts.com
• www.financialexpress.com
• www.outsource2india.com
• www.rediff.com
• www.indianic.com
• www.chillibreze.com
• www.ananthapuri.com
• www.merinews.com
• www.india-reports.com
• www.kpoweb.com
• www.ibef.org
• www.naukrihub.com
• http://timesofindia.indiatimes.com