Professional Documents
Culture Documents
Ministry of Communication
(ITES Secretariat)
Accra, Ghana
KNOWLEDGE
PROCESS
OUTSOURCING
Contents
I. Introduction…………….….……………………….….3
Page 1 of 11 ITC ©
Introduction
The central premise of KPO is to create value for the client by providing the highest-quality
business expertise and superior productivity/effectiveness rather than cost savings based
only on geographic cost arbitrage.
Page 2 of 11 ITC ©
Third party vendors surpassing Captive KPOs
• Companies that have not yet set up captives and SMEs with engagements sizes being much smaller are
highly likely to choose the Third Party vendor model.
• Third party vendors have an upper hand against the Captive KPO due to the following reasons:
– Faster initial set-up
– Faster and easier initial staffing
– Better long term employee retention
– More flexibility
– Better Cost Control
• Initial set-Up phase analysis shows that a Third party KPO takes just above 3 months to begin
operations whereas a Captive KPO takes over 14 months to begin operations.
Initial set-up time comparison between Captive and Third party vendors
Page 3 of 11 ITC ©
An overview of the Industry
• As per NASSCOM India estimates, the KPO industry is Major Players in the KPO industry
expected to grow at 45% by 2010 to a $16 billion
industry Service Segment Country
• Some countries have started developing expertise in Animation Philippines, China, India
specific services in the KPO industry.
Content Philippines, India.
• Countries like India and China are major suppliers of
Financial services China, Ireland, India.
the KPO industry and have established themselves in
most of the sectors Healthcare Russia, India.
• Although nations like India, China are well established IT/R&D China, Russia, India.
and are considered as the leaders in the industry they
Legal New Zealand, India.
face significant competition from countries like Ireland
and Philippines, which are the new emerging nations. Pharmaceuticals Russia, Ireland, India.
Offshore Leaders India, China, Canada, Mexico, South Africa, Ireland, Russia, and Philippines
Challengers Brazil, the Caribbean region, Eastern Europe, Malaysia, Israel, Singapore, and
Vietnam
Next in Line Northern Ireland, Bangladesh, Ghana, Korea, Mauritius, Nepal, Senegal, Sri
Lanka, Taiwan, and Thailand
10
• Developed economies, such as the US, UK, and countries in Western Europe are increasingly facing a
shortage of highly trained and specialized professionals in various knowledge-intensive high-skill sectors.
Figure above shows the country-wise contribution to the demand side of KPO.
• US, UK, Germany and France are the countries that drive the demand for the KPO industry. However, US
earns the maximum from outsourcing and a comparison of these nations is shown below.
0.57
Value of Labour
Re-Employed
0.44
0.34
Direct Benefits 0.07
0.50 0.05
0.03
Cost Savings for -
0.53 0.36 0.36
Customers &
Investors
11
Page 4 of 11 ITC ©
Benefits of KPO
• Along with the cost effectiveness, countries can expect more than one of the following benefits:
Peak load absorption Organisation does not have to build their own headcount and have to spend less on
infrastructure
Complexity Reduction Significantly reduce the complexities involved in managing and continuous knowledge
building of human resources and concentrate on core activities
Access to Global Reach Reduction in cost of investment in facilities, infrastructure and human resources to a
large extent by outsourcing to a KPO vendor having global presence
Enhancement of Service Offshore centres have been able to make dramatic improvements in process quality
Quality and productivity as compared to that in the parent location
Accelerating Process Outsourcing non-core activities to specialized firms that are better, faster and more
cycle efficient at managing these processes, can accelerate the process cycles and reduce
turn-around time.
Availability of skilled Supply of skilled labour in most of the countries supplying KPO has been increasing
workforce at a steady pace.
12
13
14
Page 5 of 11 ITC ©
South East Asia-Pacific (contd…)
15
C o u ntry F in an ce/
E n g in eer G en eralist
Name A cco u n tin g
C hin a 10 15 3
P hilip pin es 20 30 25
A sia
In d ia 25 15 10
M a lay sia 35 25 20
16
Europe
• Eastern Europe has 40 to 50 provincial cities with universities large enough to supply a highly skilled
labour force at lower labour cost.
• Outsourcing here would help to spread potential risks across a portfolio of locations with different risk
profiles by taking into account the reliability of infrastructure, political stability, and the possibility that
talent might emigrate be enticed by competitors, or prove less capable than anticipated.
• Countries like Russia could play a major role in the KPO industry if it were to introduce changes in its
labour policies
• If proper measures are taken by the European countries for development of outsourcing, European
region can catch up with Asian nations.
17
Page 6 of 11 ITC ©
Europe (contd…)
18
Europe (contd…)
19
Country Finance/
Engineer Generalist
Name A ccounting
R ussia 10 20 10
C zech
50 40 20
Eastern R epublic
Europe
Poland 50 30 15
H ungary 50 50 30
20
Page 7 of 11 ITC ©
Latin America
• Latin American regions have a strong cultural affinity with the western regions.
• However, due to cost factors and lack of significant talented labour pool, these regions are
lacking behind
• Also, these regions cannot provide a 24X7 support to the western regions since they fall in
the same time zone.
• Often labour policies act as a hindrance in outsourcing of services.
21
Latin America
22
Country Finance/
Engineer Generalist
Name Accounting
Brazil 13 13 8
Latin
America Mexico 42 35 11
23
Page 8 of 11 ITC ©
Middle East
24
25
26
Page 9 of 11 ITC ©
Selection of a KPO vendor (contd.)
• Over and above the factors mentioned earlier, the other important aspects the
companies should look into are:
– Security Practices and Initiatives
• Though security certification is a minimum requirement, internal security policies and
safeguards against vendor’s personnel are more important.
• Some of the security compliances that the companies look for are:
– Network Security Compliance
– Personal Security Compliance
– Physical Security Compliance
– Competitive Infrastructure
• Real estate is being developed to incorporate state-of-the-art telecommunications technology
(see example) in order to create smart buildings that have fibre optic cabling, alternative
power sources, and high-capacity, high-speed digital networks
• Easy accessibility to persons and documents
– Skills Sets
• The human resources at the vendor should possess certain basic skills sets as per the
requirement of different business segments
27
28
Staying Competitive
• To stay ahead in the global KPO market, vendor has to develop its indigenous KPO
niche to maintain its leading edge. Few ways of overcoming the challenges are:
29
Page 10 of 11 ITC ©
India, The Success Story
30
31
33%
13%
13% 2 % 1%
F in a n c e A n im a t io n
D a ta & M a rk e t R e s e a rc h HR & C om p
Legal D e s ig n
E d u c a t io n P h a r m a a n d M e d ic a l
R& D
32
Page 11 of 11 ITC ©