KPO (KNOWLEDGE PROCESS OUTSOURCING)

The next big opportunity

Presented BySanjeev PrasadAkhilesh Mishra

Paradigm shifts taking place in various facets of MBA education.

Earlier Now Production and Operations Management

ERP, CRM, SCM and IT enabled manufacturing.

Marketing Management E-business, E-com, planning web enabled marketing, global international business, B2B and B2C market places and Cyber exchanges etc;

Human Resources Management

E-HRM, outsourced web based HR management, Distributed HRM etc;

Finance Management Globalized economy, E-enabled financial data bases, IT in markets management etc;

Systems Management ICE or IT Technology components, Networking, Sun and Microsoft and other Technologies, IT management, Knowledge management, Business Intelligence etc.

THE VALUE CHAIN

CEO

Sr. Executives/MANAGERS

KPO

BPO

CALL CENTRE EXECUTIVE

BPO KPO

It provides services like customer care, technical support through voice processes, tele-marketing, sales, etc.

Low end services Process expertise Pre-defined processesIt employees not- so- qualified workers as it focuses on communication skills

KPO provides in-depth knowledge, expertise and analysis on complex areas like Legal Services, Business & Market Research, etc. High end services Knowledge expertise Requires application, understanding of business and analytical bent of mind It involves skill and expertise of knowledge workers with excellent educational background.  

Difference between KPOs and BPOs: We can say that KPOs emerged from BPOs.

The kind of job it entails

content developmentmarket researchequity researchdata researchdatabase creationanalytical servicesfinancial modelingdesign and development in industriesremote educationpublishing and legal support

How it can make India a global player

Large talent pools and favorable government policies together make India the most conducive environment for KPO

Several global players such as McKinsey, Reuters, Harris Interactive and Ipsos among others are already investing in India.

As with the BPO sector, India is cost-effective and provides a vast intellectual talent with expertise in areas such as research and analysis.

These companies outsource their processes to India for:

Cost savings Operational efficiencies Access to highly skilled workforce Improved quality

Why KPO ?KPO is a quick-money sector provides long-term career optiongood performers have tremendous opportunity for growth in salary package, favorable business environment Governments Policy decision encourage this sector Strong requirement of Well-educated, knowledgeable, analytical candidates

HISTORY of KPO Sector in INDIAKPOs have evolved from BPOs. KPOs were introduced in India by McKinsey when it first set up a knowledge center in India in 1987.But KPOs actually started coming up in India in 2000 when many companies like OfficeTiger, GE, Gartner, etc opened their research centers here. From 2000 to 2005, KPOs were in their growing stage. And during this duration, India became a leading destination for KPOs.

Skills KPOs are looking for:

Analytical skills for analyzing data. Usage of resources for information research Making presentable reports from raw data Theoretical and conceptualization knowledge Computer proficiency (software and hardware devices) English Speaking/writing skillsTo collate, synthesis, analyze interpret Data and Information To Search for advance information To Generate various scenarios, judgments and decision MakingHigh level of ConceptualizationTeam Work

The following are the areas associated with the KPO sector.

Business and Technical Analysis Business & Market, Equity Research Data Analytics Financial Consultancy and Services Intellectual Property (IP) Research Learning Solutions Legal Services Database CreationNetwork Management Financial ModellingResearch & Development Training & Consultancy Writing & Content Development

StrengthsLarge talented pool Quality IT training Low labour costs Success of BPOs Good knowledge of project management skills Supportive government policies Many new areas of specialization are being covered making KPO sector spreading its wings Consideration to quality standards like ISO 900x and Six Sigma Billing rates are lower as compared to billing rates in other countries

Weaknesses•  Immoral and unethical practices related to handling of crucial data •  Rising wages • The inability to uniformly develop and provide infrastructural requirements as real estate prices are rising in major cities. •  Inadequate Intellectual Property Rights (IPR) protection regime in India•  Billing rates are higher as compared to billing rates in BPOs

OpportunitiesIncreasing domain expertise More areas of specialization can be added to KPOs Ample opportunities for SMEs

ThreatsNon retention of talent Expected labour supply gap as jobs grow faster than the workforce.  

SWOT ANALYSIS

KPO OPPURTUNITIES IN THE FOLLOWING SECTORS

RETAILE-MARKETINGBUSINESS & TECHNICAL

ANALYSISLEARNING SOLUTIONDATA ANALYTICSINTELLECTUAL PROPERTY RIGHTSINVESTMENT RESEARCHLEGAL & INSURANCE CLAIMSPATENT FILINGS

HIGHEST PAYING KPO FIRMSGold mans sachs bangaloreDeutsche bank bombayUBS hyderabadSBI capital JP morgan chase bombayKotak bank bombayICICI bombayEvalueserve delhiGenpactWNSCopal partnersLehman brothers bombayLozenge Consultancy ServicesPatni Computer SystemsHutchison EssarHector & Streak

Unlike conventional BPO where the focus is on process expertise, in KPO, the focus is on knowledge expertise.

KPO involves business processes requiring domain expertise and high-end qualifications such as the MBA and/or the engineering, medical, law, accountant degree or other highly skilled professional qualifications.

KPO requires moving away from the simple execution of standardised processes to the implementation of processes that demand advanced analytical and technical skills together with some decision-making.

India, China, Russia, Canada, Israel and the Philippines are some of the major KPO service providers today.

A BPO executive in a developing nation earns about $6,000 a year whereas his KPO counterpart can earn over $8,800 annually– a huge 46 per cent difference.

REQUIREMENT FROM AN M.B.A STUDENTDomain Knowledge, I.T, E.R.P, Business Applications, E-commerce

Qualifications :MBAs (HR, IT, Finance, Marketing, IB, etc ) Doctors ( MBBS) Engineers (B. E., B. Tech, M. Tech) Lawyers (LLB) Teachers (B. Ed) Chartered Accountants Economists Architects

So basically, the key competencies required are :

Domain knowledge Basic interest in the field of work Aptitude for working with data and information Good communication skills Team work

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.

Future Scenario

Market potential for outsourced non-IT services (2008)

Service Potential (In billion Dollars)

HR Service 44Customer interaction services 33Data Search, integration andManagement 18Finance and accounting 15Remote education 15Other including pharmaceutical andresearch and development 8Engineering and design 5Medical Content and services 1Legal Content and services 1Translation, transportation etc. 1

Financial Services : These include financial determining, insurance, risk assessment, equity research, underwriting, fund management, actuarial analytics, debt collection and recovery, corporate & market research, etc. Some of the KPOs working in this area are Smart Analyst, Office Tiger, The Smart Cube.

Market Research and Analytics : These include services like writing & editing, secondary & primary research, formatting client reports, conversion of findings to knowledge, etc. Some of the KPOs working in this area are marketRx, Pipal Research, Evalueserve, Inductis, OfficeTiger, Copal Partners, CRISIL, etc.

CLASSIFICATION OF KPO SECTOR

India is emerging as a leader in KPO market•Well established IT services and BPO sector

•Excellent project management skills •Highly qualified professionals

•Proficiency in English •Supporting government policies

Challenges which KPO industry is facing are as following: •Expected dearth of domain expert professionals

•High attrition rates •Talent retention

•Data Security and confidentiality

Growth drivers of KPO sector: Shortage of knowledge professionals in countries like USA, UK, etc.

Low wages labour BPOs moving up the value chain

Single vendor services Talented workforce

Sky High Salaries in KPOs

go upto 6 lacs per anum. Salaries in Indian KPO are 25%-50% higher than in other KPOs around the world.

It is not just about the salaries at the entry level. Salaries are bound to increase later on also as the work outsourced to Indian KPOs is of high quality and of complex nature. It takes a lot of expertise and skills to carry out the work. Therefore many companies offer their employees 6 monthly salary hikes anywhere between 15%-20%.

And in the future also, the salaries are going to rise in the Indian KPO sector. This trend will last atleast upto next 10-15 years. The reason being India's demography and the young talent pool available here.

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 approximately 50% of them proficient in English.

If you are a fresh graduate and you want a high paying jobMBA'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 go upto 6 lacs per anum.

Salaries in Indian KPO are 25%-50% higher than in other KPOs around the world.

Salaries are bound to increase later on also as the work outsourced to Indian KPOs is of high quality and of complex nature. It takes a lot of expertise and skills to carry out the work. Therefore many companies offer their employees 6 monthly salary hikes anywhere between 15%-20%.

And in the future also, the salaries are going to rise in the Indian KPO sector. This trend will last at least upto next 10-15 years. The reason being India's demography and the young talent pool available here.

Why KPO’s

Top Players in KPO Sector

S. No. Companies1. Evalueserve (EVS)

2. McKinsey & Company

3. RocSearch

4. Pangea3

5. OfficeTiger

6 Copal Partners

7. Gevity

8. Pipal Research

9. Grail Research

10. Inductis, EXL Service

11. WNS GLOBAL SERVICES

12. ACCENTURE

13. APTARA (TECHBOOKS)

14. 24/7 Customer

15. ICICI OneSource

16. Ugam Solutions

17. Convergys

NEWS FROM THE KPO INDUSTRY

YES Bank setting up a KPOYES Bank, a famous name in private sector banks, is all set to open up a knowledge processing outsourcing (KPO) unit. It is a stand alone project and it will be named as Project TOPS (technology, operations, payments and services). As estimated by Rana Kapoor, MD and CEO, YES Bank, the unit will start operating in FY 2008-09. Initially it will provide services in banking sector. The pilot project presently is being run at YES Bank's offices at DLF Cyber City in Gurgaon and in Mahalakshmi in Mumbai. Around 500 people are working on the pilot project as of now. Till now applications like audit and compliance are being outsourced to the unit. But later on it will move on to other financial services as well.

India to be preferred location for global KPO industry: KPMG

The financial services sector will account for a major proportion of the KPO industry and its worth will be in excess of $5 billion by 2010.

India top outsourcing hubs, says survey

India remains the most favoured outsourcing destination, according to CyberMedia's Global Services survey on emerging outsourcing destinations in 2007.

Even as fears that the rupee appreciation and rising wage costs would blunt its edge, India still boasts of the largest number of cities (6), which figure among the top-50 emerging cities, followed by China (5), Brazil (3), the Philippines (3) and the US (3), among others.

The last word: It would not be very wrong to state that

KPO do offer an alternate and fruitful career path for our young minds.

Going by the current statistics, the KPO wave is here to stay and Indians can now

benefit much more than before.

“Knowledge Process Outsourcing May Be The Next Boom Business”