KPO vs BPO Is India slowly and gradually moving towards the KPO regime? Well this is the buzz which is slowly makingwave this New Year.After achieving success in BPO, India has taken a step forward to widen its success towards the KPO regime.KPO industry unlike BPO provides domain based processes and business expertise. KPO is more like a challengeas it demands advanced and expertise skills on part of its employees. BPO on the other hand is more or lesslike a commodity business which stretches more on information technology and its various sectors.BPO significanceNo matter KPO is a step ahead of BPO but this does not mean the end of BPO. The BPO Industry will continueto be successful in India . BPO has its own way to solve a particular problem. The BPO market is long term innature as compared to the KPO market. With every passing day the BPO market base is expanding and so isthe various processes outsourced through it.BPO undertakesData processingBasic data entrySetting up of a bank accountDepartment OutsourcingProvides technical supportProvides email support to its customersEven after the entry of KPO in the Indian market. BPO will continue to derive higher revenues as compared tothe KPO industry. The BPO exports will be as higher as $20 billion by the end of 2010. By a recent study doneby experts the BPO industry is expected to grow globally at a CAGR of over 26 percent by 2010.
KPO SignificanceThere is no doubt that KPO will be the next big thing after BPO. KPO unlike BPO is not just restricted toinformation technology. It specializes in various other challenging sectors namely business research, Clinicalresearch, Intellectual property research etc.The KPO exports are estimated to be around $12 billion at the end of 2010. The future of KPO appears to bebright and is expected to achieve a high end of BPO at the end of 2010. The KPO regime looks all set andpoised to accept the new challenges of high training cost and a much higher attrition rates. The shorter termcontracts will demand high quality work and skills on part of its workers. KPO industry has accepted all thesechallenges and is all set to leave a mark just like the BPO brigade.Knowledge Process OutsourcingThe evolution and maturity of the Indian BPO sector has given birth to yet another wave in the globaloutsourcing scene: KPO or Knowledge Process Outsourcing. The success in outsourcing business processoperations 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 allunderlying expectations in offshoring high-end processes to India .Indias intellectual potentialThe myth that Indian companies can only provide "software coolies" is soon changing to the reality of Indiancompanies being capable of almost anything, even rocket science! India has a large pool of knowledge workersin 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 theoutsourcing of high-end processes to low-wage destinations. Hence Knowledge Process Outsourcing involvesoffshoring of knowledge intensive business processes that require specialized domain expertise.The future of KPOAccording to a report by GlobalSourcingNow, the Global Knowledge Process Outsourcing industry (KPO) isexpected 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, comparedwith the current figure of 25,000 employees. A report by Evalueserve predicts that India will capture more than70 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. Incontrast, the global KPO market is poised for an expected CAGR of 46% by 2010. The following figuredemonstrates 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 KPOKPO delivers high value to organizations by providing domain-based processes and business expertise ratherthan just process expertise. These processes demand advanced analytical and specialized skill of knowledgeworkers that have domain experience to their credit. Therefore outsourcing of knowledge processes face morechallenges than BPO (Business Process Outsourcing). Some of the challenges involved in KPO will bemaintaining higher quality standards, investment in KPO infrastructure, the lack of talent pool, requirement ofhigher 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 hasbeen ranked the most preferred KPO destination owing to the countrys large talent pool, quality IT training,friendly government policies and low labor costs.India is well equipped to meet this emerging sectors challenges and all set to be the global KPO hub!KPO refers to knowledge-intensive work that involves specialized domain expertise. High value processes thatfall into this realm: valuation; research; investment researches; patent filing; and legal and insurance claimanalysis. That would certainly include customer analytics and related processesWHILE OUTSOURCING is present in numerous business functions, including manufacturing, legal, financial andhuman resources, it is the term BPO (Business Process Outsourcing) that is largely in the news on a daily basis.Indias capabilities in this area have been moving towards enhancing the nature of the work done. From meredata entry kind of work, the fosus has shifted to transaction processing. Now, there is a nascent move towardsknowledge process outsourcing (KPO).Unlike in BPO where the focus is on executing standardised routine processes, KPO involves processes thatdemand advanced information search, analytical, interpretation and technical skills as well as some judgmentand decision making. Examples of KPO functions are intellectual property or patent research, R&D inpharmaceuticals and biotechnology, data mining, database creation, and a range of analytical services such asequity research, competitive intelligence, industry reports and financial modelling. Many of these activities lendthemselves to remote execution from anywhere.Typical users of KPO services include market research and consulting firms, investment banks and financialservices institutions, industry associations, media, publishing and database firms, and corporate planningdepartments of large Fortune 500 companies. Several global players such as McKinsey, Goldman Sachs,Reuters, IMS Health, Harris Interactive, Ipsos, Maritz, AC Nielsen, TN0S and the WPP group are already usingIndia as a remote base.The KPO Value ChainTypically, the extent of offshoring is a function of the degree of e-enablement possible and the quality of thehuman capital required. Some activities such as paralegal and medical transcription require low quality humancapital as compared to activities such as data mining and analysis, engineering design and e-learning. Thelatter are also highly amenable to IT enablement. Other services such as legal consulting, intellectual propertyresearch and strategic consulting require the highest level of human capital and are the least amenable to ITenablement.A veritable gold mine
Companies in the KPO space thus need to make the transition from offering services that require low humancapital quality and low IT enablement to those that require a high degree of human capital and IT enablement.The National Association of Software and Service Companies projects that the total global offshoring marketopportunity by 2008 will touch $141 billion. Of this, data search, integration and management will account for$18 billion. Medical, legal content and associated services represent an opportunity of $2 billion. However,Scope e-Knowledge Center estimates that only 45-50 per cent (about $65-70 billion) of the total off-shoringopportunity is likely to be realised even by 2010. According to Scope, the global offshore BPO (non-IT) revenuein fiscal 2003 was close to $9 billion and this is expected to grow by about 35 per cent a year through 2008.BPO-Business Process Outsourcing (BPO) is the leveraging of technology or specialist process vendors to provideand manage an organisations critical and/or non-critical enterprise processes and applications. The mostcommon examples of BPO are call centres, human resources, accounting and payroll outsourcing. Businessprocess outsourcing may involve the use of off-shore resources.Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount ofrisk is transferred to the company that is running the process elements on behalf of the outsourcer. BPOincludes the software, the process management, and the people to operate the service, while a typical ASPmodel includes only the provision of access to functionalities and features provided or served up through theuse of software, usually via web browser to the customer