36878187 Knowledge Process Outsourcing KPO Overview

8/8/2019 36878187 Knowledge Process Outsourcing KPO Overview

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What is KPO?

y Knowledge Processing Outsourcing (popularly known as a

KPO), calls for the application of specialized domain pertinent

knowledge of a high level. 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. KPOIndustry 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.


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y In fact, it is 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. 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, operationalefficiencies, 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

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.


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Stabilization

2005-2010

Consolidation

(2002-2004)

Evolution ofKnowledge Services in

India

1997 - GE Capital

Services establishes its

back office operations

Growth

(1999-2001)

Inception

(1996-1998)

1993 IGate Global

Solutions (formerly

Mascot systems)establishes its

offshore center in

Banglore

2000 Third Party market

competition increases

with Mphasis, FreshMind

and Office Tiger opening

their operations

2001 Evalueserve, Irevna

and Netscribes enter as

Third Party providers

Start of knowledge

services

Captive players enter

the Indian market

Large captive players

enter the market

Third Party players

start cropping up

Competition among Third

Party players heat-up

Market consolidation

Collaborations betweenThird Party player

2004 ICRA and Bytes to

Knowledge (B2K)

collaborate to form

Brickwork to offer financial

services

Captive Players to increase

foothold in the Knowledge

Services market.

Market Share of Captive Players

expected to increase to 68% in

the year 2010 from the current

62%

Industry will comprise few large

third party players along with

the captives.

Very few boutique firms likely to

exist on a standalone basis

Independent research for

investment banks and large

businesses to show traction

going ahead

Characteristics:

Examples:


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NEED FOR KPO

1. Accelerate Reengineering Benefits

2. Access to Top Class Capabilities

3. Cash Infusion

4. Free Resources for Other Purposes5. Function Difficult to Manage or

Out of Control

6. Improve Company Focus

7. Make Capital Funds Available8. Reduce Operating Costs

9. Reduce Risk

10. Resources not Available Internally


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Difference between KPO and BPOKPO BPO

Outsourcing of knowledge intensivebusiness process and activities Outsourcing of standard businessprocess

Value, time to market, scale,flexibility are the primary drivers,then cost

Cost is the primary driver

Knowledge creation process is notwell defined

Processes are mostly standardized

Industry is evolving and clients arestill learning

Industry is mature and outsourcingcomponents easily carved out

Clients perceive risk of datasecurity and IP leakage Most of the risk have beenaddressed by infrastructure,processes .

Domain expertise (depth) moreimportant than size

Bigger the better: economies ofscale is a competitive advantage

Finding skilled talent is the biggestchallenge Managing attrition is the biggestchallenge


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The spectrum ofKnowledge Services

Business Research

Economics Research

Company and Industry

Research

Documentation & Library

Services

Investment Research

Corporate Finance

Financial Modeling and Analysis

Investment Banking Support

Market Research

Data Acquisition and Data

Entry

Data Processing

Presentations

InformationManagement

Database Creation

Quantitative/Financial Statement

Analysis

Data/Information Synthesis

Legal Research

Legal, Para-Legal Content and Services

Drafting, Review of Documents and

Contracts Legal Research (Case History)

Sourcing Management

Spend Data Analysis & Supplier intelligence

Low cost country sourcing

Advisory Services

Intellectual Property Research

Patent Drafting and Filing, Patentability Assessment

Overlap Analysis, Competitor IP Landscaping

IP Portfolio Management, IP Licensing &

Commercialization

Analytic Services

Data Warehousing

Data Preparation, ETL services

MIS & Reporting

Business Intelligence

Statistical and econometric Modeling

Optimization modeling and ORsolutions

Technology Research

IT Services

Application development and maintenance Security Internet & E- commerce

Knowledge

Services


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Functions OfKPO

Analyzing data and procure information to produce

meaningful documents.

Researching information database from various sources.

Converting raw un-transcribed technical data into presentable

documents.

Use of high levels of conceptualization and theoretical knowledge.

Proficiency with various advanced software and hardware devices.

Maintaining workflow, meeting deadlines, and applying quality controls.


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Indias Competitive advantage vis--vis other nation


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The service sector accounted for 51% of Indias GDP in 2003

Estimates that the share of service sector is expected to rise to 57% in 2010.

51

57

48

50

52

54

56

58

Market S are

(%)

2003 2010

Year

S are ofservice Sector in india's GDP

Indias Market Trends

Source : Evalueserve


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Key emerging issues for KPO

Contracts

How to define SLAs for KPO process Duration of contracts?

Pricing

How to sustain the value proposition to

the client?

Maintaining healthy P&L

Governance Structures

Onshore offshore mix

Unbundling of roles: Sales/Program

Management/Operations

Service Delivery

How should operations be organized

for better financials and delivery

conforming to client expectations?

Selling & Transition

Best practices for transition?

Strategies for growth ofKPO accounts?

Quality & Risk Management

Business Continuity

Information security & compliance

Inventorize information assets


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Strengths L

arge talented pool Quality IT training Low labour costs Success of BPOs Good knowledge of project managementskills Supportive government policies

Many new areas of specialization arebeing covered making KPO sectorspreading its wings Consideration to quality standards likeISO 900x and Six Sigma Billing rates are lower as compared tobilling rates in other countries

Weaknesses

Immoral and unethical practices relatedto handling of crucial data Rising wagesThe inability to uniformly develop andprovide infrastructural requirements asreal estate prices are rising in majorcities.

Inadequate Intellectual Property Rights(IPR) protection regime in India Billing rates are higher as compared tobilling rates in BPOs

Opportunities Increasing domain expertise More areas of specialization can be

added to KPOs Ample opportunities for SMEs

Threats Non retention of talent Expected labour supply gap as jobs growfaster than the workforce.

KPO Sector SWOT Analysis


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Future Of KPO

y In the next 5 years India will employee more

than 2.5 lac people

70% of the global KPO business.

India has the world's second highest number

of engineers, scientists, managers.

Also, it has the largest talent pool in IT industry

with approximately50% of them proficient in English.

y If you are a fresh graduate and you want a high

paying job


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y If you are a fresh graduate and you want a high paying job

MBA's, CA's, law graduates etc .with a starting package of

4.2 to 4.8 lacs per

annum.

Exevo, Evalueserve or Pipal Research, the package can goup to 6 lacs per annum.

y Salaries in Indian KPO are 25%-50% higher than in other

KPOs around the world.

y And in the future also, the salaries are going to rise in the Indian KPO

sector.

This trend will last at least up to next 10-15 years.

The reason being India's demography and the young talent pool available

here


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36878187 Knowledge Process Outsourcing KPO Overview

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