Knowledge Process Outsourcing: is the Sector Ready for the Change

KPOset of guidelines of work, whereas in KPO’s
Introduction:expertise work is done which is based on experience,
KPO as the name signifies is having its focus on theintellectual capacity and analytical skills with combination
knowledge based expert services as compared toof technical knowledge. All these factors together
BPO which is solely based on the process expertisemake the quality standards tough and difficult to be
rest on the standards based routine process includingfollowed.b) Lack of required talented employees:
the data entry work. Knowledge Process OutsourcingKPO also faces the problem of having low rate of
in the simplest words can be stated as the upwardtalented employee’s pool because of which the
shift of BPO in the value chain. It is consisted of theservices can not be completed within the desired time
high-end services of the Business Processand with expected efficiency. Unlike BPO, where the
Outsourcing (BPO) industry which are expected tojobs are routine in nature and average intelligence level
have a bright future worldwide. KPO provides a shiftis required, KPO requires high degree of expertise to
from the existing low end services of BPO towards aprovide high end services to the customers.c)
world of more analytical, technical and advanceMaintaining higher degree of confidentiality:
services. KPO industry is expected to work grow at aKPO maintains high degree of confidentiality as there
magnificent rate in the coming years.work is much more sophisticated and confidential in
Where, BPO talks about completion of high volume ofnature as compared to that of BPO’s. KPO’s
work in a given time with maximum rate of efficiencyhave to maintain the desired level of confidentiality and
and yielding of maximum profit for the organizationis also expected to provide superior quality services as
with the low end services. KPO stands with thecompared to their counterparts.d) Rise in the
operations that require highly creative and learnedinvestment in KPO infrastructure:
expertise who have the judgmental decision makingWith the evolution of KPO, the investment pattern has
power and acquire depth knowledge about thealso risen up. KPO serves high end services for which
specialized area. KPO industry is consisted of highthe infrastructure requirement differs as compared to
skilled expertises that perform the work on typicalthe infrastructure required for the BPO. For KPO, high
domain based processes and yield high level resultslevel investment in infrastructure is required through
with maximum customer satisfaction.which the services can be provided on the base line of
KPO has emerged due to the competitive advantagethe set standards.
of BPO sector and its overwhelming success rateCompanies actively participating in KPO based
worldwide. Due to the low cost, operational efficiencyactivities (In India):
and talented workforce, India is consistently makingIn India, there are a large number of organizations who
itself a leader in the BPO services, as a result of theare dealing in KPO related activities. These
tremendous success rate of BPO, many overseasorganizations are active KPO service providers in the
organizations have decided to shift themselves furthermarket and are providing the high end services with
from low-end services to high-end services throughthe help of the experienced expertise. Some of the
which more profit can be earned and more customerorganizations which are dealing in the KPO sector (In
base can be satisfied.India) are:a) ICICI OneSource.b) EXL Services.c)
There is a high probability rate of the success of KPOTechBooks.d) Genpact.e) Evalueserve.f) 24/7
in India as many organizations have come to theCustomer.g) Copal Partners.
conclusion that it is more beneficial for them toAll these organizations are dealing the KPO related
outsource the non-core services and concentrate onactivities through which they are providing high end
the core competency services only. These non- coreservices to the customers. These companies are
services will provide a huge market for thegenerating a huge amount of revenue from these
organizations dealing in the outsourcing activities as aservices and are dealing with national and international
large number of companies have invited applicationsclients.
for the outsourcing and yet many other are in the lieu.Reasons of INDIA to be the most preferred location:
Scope of KPO:India is always taken as one of the biggest challenger
According to a report of National Association ofin the world market for providing the BPO services.
Software and Services Companies (NASSCOM), theThere are many reasons for India to be a strong
Indian chamber of commerce that serves as ancontender in the world of outsourcing services. Moving
interface to the Indian Software industry, Knowledgeahead in the path, KPO emerges as the specialized
Process Outsourcing industry (KPO) is expected tobranch of BPO where only a certain degree of
reach USD 17 billion by 2010, of which USD 12 billionspecialized services will be provided and the high end
would be outsourced to India.services will be considered to be served. India is again
According to a recent study by “Evalueserve (aseen as one of the most preferred location due to its
Gurgaon based outsourcing company) having servicecompetitive advantage over rest of the countries.
chart for global world”, the global KPO market isSome of the reasons for India to be signified as one of
expected to grow at a cumulative annual growth ratethe most preferred location are:
(CAGR) of 46 per cent, from $1.2 billion in 2003 to $17• High rate of Expertise Pool.
billion in 2010. Compare this with the prediction for the• Cost Advantage (Compared to other countries).
low-end outsourcing services market. This is expected• Accent clarity and English Proficiency.
to have a CAGR of 26 per cent, from $ 7.7 billion to• Flexible Time Horizons.
$39.8 billion in the same period. Evalueserve says India• High Computer Literacy Rate.
provided $3.5 billion of BPO and KPO (but non-IT)• High rate of (selected) Domain Specialization.
services in 2003 and is expected to grow at a CAGR• High rate of professional graduates (especially
of 36 per cent during 2004 to 2010. Hence, it is likely toScience and Mathematics).
earn $30 billion in 2010 by providing these services.• Attractive Location.
According to Evalueserve, the KPO industry in IndiaA survey predicts that that the Indian KPO market will
had only 9,000 billable professionals in India, generatinggrow about 49 per cent by 2010(While the BPO
revenue of 260 million dollars during 2000-01. Thissector is slated to grow 30.6 per cent). At present,
number has grown to 75,400 by 2006-07 with 3.05around 25,000 professionals are employed in the KPO
billion dollars in revenue at an annual growth rate of 51industry. The figure is expected to shoot up to 2.5 lakh
per cent.by 2010.
The anticipated success in KPO comes after theIn 2003, the market share of Indian KPO sector in
success of Business Process Outsourcing (BPO) inglobal KPO market was 56%. And it is expected to
the country, which accounts for revenues of 15.8 billionreach 71% in 2010, which shows a decent growth of
dollar in 2006-07, a jump from just 7.7 billion dollar inthe sector in the coming years. According to
2003-04.NASSCOM, KPO sector worldwide is expected to
Another report predicts that India will capture morereach USD 17 billion by 2010. Out of this, India will
than 70 percent of the KPO sector by 2010. Apartaccount for USD 12 billion.
from India, countries such as Russia, China, the Czech*Source:
Republic, Ireland, and Israel are also expected to joinReasons for shift towards KPO:
the KPO industry.There are many reasons with the youth of the
According to Achal Khanna (Country Generalcountry to shift from the traditional jobs to the new
Manager), Kelly Services, “India still maintains thesector KPO. KPO are not only providing the
competitive advantage for providing, the combinationopportunity for growth but at the same time are also
of the most cost-effective and high quality manpower-satisfying the inner urge of the youth to serve
this is India's strength in the off-shoring business”.something creative in their field and show their talent to
According to a report by GlobalSourcingNOW, thethe world while earning a high rate of perks. Some of
Global Knowledge Process Outsourcing industrythe reasons because of which there is a swift shift
(KPO) is expected to reach USD 17 billion by 2010, offrom traditional jobs to the KPO’s are:
which USD 12 billion would be outsourced to India. In? High rate of monetary benefits.
addition, the Indian KPO sector is also expected to? Highly skilled expertise service requirement.
employ more than 250,000 KPO professionals by 2010,? Space for Innovativeness.
compared with the current figure of 25,000 employees.? High rate of freedom to perform the operations.
Services which can be outsourced through KPO are:? Highly recognized brands associated.
There are a variety of high end services which can be? Flexibility in work completion.
outsourced through the use of the KPO, all these? More research and analytical work associated.
activities includes a high degree of expertise,? Non-traditional lines of procedural guidelines.
intellectualness and technical efficiency. Some of them? Absorbs a large number of graduates.
can be listed as follows:? Higher degree of knowledge involvement with
1. Biotech services.creativity.
2. Medical services.Beside all other benefits, one of the strongest benefits
3. Technical analysis services.attached with the KPO’s are the monetary
4. Market research and interpretation servicesbenefits. This can be clearer with the statement of Mr.
5. Services of creative writers.Rohit Dogra, assistant vice-president, analytics at
6. Intellectual Property research services.Evalueserve: “Fresh doctors and lawyers take
7. Data recording with advance analysis services.home a cool Rs. 6-8 lakh salary package at KPOs.
8. 3-D animation related services.MBAs from non-IIM institutes take home Rs 3-5 lakh
9. In-house Research and development services.per annum. The yearly package for fresh IIM grads is
10. Pharmaceutical related services.certainly higher at Rs 4-6 lakh p.a. obviously it shoots
11. Legal services.up for candidates with domain experience.”
12. Legal advice and solution cell services.A fresh MBBS or lawyer earns Rs 1.5 lakh annually;
13. Training related services.whereas a KPO offers much more, almost 500 per
14. Consultancy services.cent more as compared to rest. This gives a clear
15. Recruitment and selection related services.indication that the KPO is regarded as one of the most
Challenges faced by KPO Industry:favorable destination for the youth of today as in 21st
KPO attracts the eyes of the organizations but at thecentury everyone will like to add in their accounts more
same it comprises of certain problems also. KPOwealth (with added advantage of having more space
faces certain challenges which are a serious concernfor creativity and innovativeness).
for the future period as they can distract the normalBibliography:
pace functioning of the organizations and hinder inArticles:
providing the high end customer services to the end• Paramita Dhar, Knowledge Process Outsourcing:
customer. The challenges which are faced by theIs India Prepared for It?, HRM Review: The ICFAI
KPO industry are as follows:a) Rise in the standardsUniversity Press, November 2006.
of quality:Newspaper Articles:
With the emergence of KPO’s there emerges• “KPO market on the rise in India” : The
requirement of high quality standards of work. BPOEconomic Times: December 29, 2005
are based on the systematic routine working which• “KPO sector to be $11.
have set procedures to be followed and have proper