BIZ TRENDS Cashing in on KPOs

Business to knowledge, the outsourcing continues

The KPO boom came, and it definitely seems poised to conquer. KPO, or the Knowledge Process Outsourcing, is a concept modelled on the very lines of the BPO. "But, the two of them digress on lines of technical evaluation," says Prashant Sinha, of Patni Computers.

Technical differences

A BPO primarily focuses on three rudimentary areas of business functioning. These include project-based outsourcing, task based outsoureing and Human Resource (HR) based outsourcing. Out of these, task-based outsourcing, or what we commonly know as call centres, have created a visible niche’ in the Indian job market in the last five years. However: for the past couple of years, KPOs have emerged swiftly and steadily, challenging the footholds of BPOs. Initially introduced as firms providing global giants with technical and functional services, KPOs have attracted the bulk of the work outsourced from economic giants like the US, into India.

Abundant benefits

The two reasons that attracted the KPO market to In- dia were the levels of cost-effectiveness that companies achieved along with the com- pletion of their work through highly skilled labour. Believes Sinha, "The overall ed- ucation spectrum of India is so expansive, that it churns out abundant skilled professionals annually to sustain an industry like the KPO." As a country overflowing with skilled professionals, working on wages considerably lower than their western counterparts, India serves as the perfect outsourcing destination for global business giants. By conservative estimates, the compensation for a chip design engineer with a Master’s degree and five years’ experience is about US $7,000 a month in the US. An engineer with the same qualification and experience in India gets about US $1,200 a month. The cost differential between engineers in the US and India is almost US $60,000 to 80,000. For obvious reasons, the cost benefits are not ignored.

Diamonds on top of gold

Besides a massive reservoir of skilled labour, the potential of these professionals to be multi-lingual serves as an added advantage in the booming KPO industry

The number game

Whereas the BPO industry is perched at reaching US $16 billion by 2010, according to the Ministry of Information Technology and Communications, India is all set to capture 15 per cent of the US $54 billion knowledge process outsourcing industry worldwide by 2010 from the current five per cent.

Though the KPO sector has entered the job market with a stronger foothold, India as a host could loose steam to countries like Russia and Czechoslovakia, if stringent policies and technological advancements are not worked upon. Moreover, as Sinha adds, "To nab the KPO boom, companies undertaking outsourcing need to have strong expertise of the domain that they are working within. Any goof-up could have major consequences."

After all, our loss will certainly translate into someone else’s gain

  • I am very impressed with this article I have just read. This was a pertinent post! KPO, Knowledge Process Outsourcing, is a new wave in global outsourcing, which has evolved as an intellectual cousin of BPO, or Business Process Outsourcing in India. KPO deals with off shoring of high-end jobs in order to save costs and increase operational efficiencies. India has a huge amount of intellectual resources and specialized expertise, which makes it a one of the most favorite destinations.

    Julienne

  • Interesting post you have here. There is a huge potential in this field of knowledge. The whole concept of KPO is information driven. It means that it is a continuous process of creation and dissemination of information by bringing together the information industry leaders to create knowledge and see meaning in information and its context. -Josh

  • It is being claimed that KPO is one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping into Knowledge Process Outsourcing because of its favorable advantageous and future scope. But, let us not treat it only a ‘B’ replaced by a ‘K’. In fact, Knowledge process can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. And when this activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing.

  • A very informative post. However, it seems that people seem to confuse KPO and BPO. Although KPO may have stemmed out of BPO, the main difference between the 2 is that KPO is a knowledge-related and information-related work such as data analysis, market research services and investment research.