Gearing for KPO

Some issues related to Transition, Delivery & Commercials

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Evolution of Knowledge Services in India

Inception (1996-1998)
Characteristics:
Start of knowledge services Captive players enter the Indian market Large captive players enter the market Third Party players start cropping up Captive Players to increase Competition among Third Party foothold in the Knowledge players heat-up Services market. Market consolidation Market Share of Captive Collaborations between Third Party Players expected to increase player to 68% in the year 2010 from the current 62% 2001 Evalueserve, Irevna and Industry will comprise few Netscribes enter as Third Party large third party players along providers with the captives. 2002 ABN Amro and AT Kearney Very few boutique firms likely establishes their back office to exist on a standalone basis operations Information Management and Analytics to fuel the market 2003 Morgan Stanley and growth in the short run. Prudential establishes their back office operations Independent research for investment banks and large 2004 Crisil acquires Irevena businesses to show traction going ahead 2004 S&P and McGraw Hills
acquires Capital IQ 2004 ICRA and Bytes to Knowledge (B2K) collaborate to form Brickwork to offer financial services

Growth (1999-2001)

Consolidation (2002-2004)

Stabilization 2005-2010

Examples:
1993 - iGate Global Solutions (formerly Mascot systems) establishes its offshore center in Banglore 1996 - McKinsey conceives, builds and manages its Knowledge Center 1997 - GE Capital Services establishes its back office operations 1998 Some Captives (such as Frost & Sullivan and Gartner) and third party players (such as Capital IQ) establish their operations 1999 Amex Opens its back office operation 2000 Third Party market competition increases with Mphasis, FreshMind and Office Tiger opening their operations

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The spectrum of Knowledge Services

Business Research Technology Research
    IT Services Application development and maintenance Security Internet & E- commerce  Economics Research  Company and Industry Research  Documentation & Library Services

Investment Research
 Corporate Finance  Financial Modeling and Analysis  Investment Banking Support

Market Research Legal Research

 Legal, Para-Legal Content and Services  Drafting, Review of Documents and Contracts  Legal Research (Case History)  Data Acquisition and Data Entry  Data Processing  Presentations

Knowledge Services

Analytic Services
     Data Warehousing Data Preparation, ETL services MIS & Reporting Business Intelligence Statistical and econometric Modeling  Optimization modeling and OR solutions

Sourcing Management
 Spend Data Analysis & Supplier intelligence  Low cost country sourcing  Advisory Services

Intellectual Property Research

 Patent Drafting and Filing, Patentability Assessment  Overlap Analysis, Competitor IP Landscaping  IP Portfolio Management, IP Licensing & Commercialization

Information Management
 Database Creation  Quantitative/Financial Statement Analysis  Data/Information Synthesis

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Knowledge Services Employee Growth in WNS

300% Growth

400

100

April 2004

May-05

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Comprehensive industry-focused business units

Travel Services
 Reservation services  Customer service  Revenue accounting  Refunds and travel accounting  Fare estimation  Cargo & baggage management  Yield management

Insurance Services
 Underwriting  Policy administration  Claims management and collections  Accident & repair management services

Health Claims
 Claims data validation  Preadjudication investigations  Adjudication  Repricing  Policy administration  Billing & receivables management

Knowledge Services
 Business research & analytics  Market research  Data mining & analytics  Investment research

New Segments

Mortgage Processing & Real Estate

Manufacturing, Distribution & Retail

Shared Services
(Finance & Accounting, Human Resources)

Contact Center
(Phone, Web, Email, Correspondence)

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KPO: Process evolutiontwo specific examples.

Market Research Processes
1 Survey Design 2 Survey Administration 3 Data Preparation 4 4 Data Processing 5 Analysis & Presentation Statistical modelling/OR modelling Analytical Intelligence 3 Business Intelligence 2 Data processing 1 Data Warehousing

Analytics Processes

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Current Market Share Of Key Knowledge Service Verticals by FTEs

Total: 12,000
Investment Resarch 4.5% Business Consulting 5.5% Legal Research 5.6% Business Research 9.2% Intellectual Property 2.2% Sourcing Management 0.8%

Information Management 33.2%

Market Research 11.5% Analytic Services 27.5%

Source : Nasscom, press reports and WNS Analysis

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Key emerging issues for KPO (vis--vis BPO)

Selling & Transition
 Best practices for transition?  Strategies for growth of KPO accounts?

Pricing
 How to sustain the value proposition to the client?  Maintaining healthy P&L

Service Delivery
 How should operations be organized for better financials and delivery conforming to client expectations?

Contracts
 How to define SLAs for KPO process  Duration of contracts?

Governance Structures
 Onshore offshore mix  Unbundling of roles: Sales/Program Management/Operations

Quality & Risk Management

 Business Continuity  Information security & compliance  Inventorize information assets

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Selling & Transitioning

 Synchronizing Sales and Operations
Selling realistic scope of work Negotiating right SLAs Selling skills at the right price Selling the program evolution in conformity with the delivery constraints

Transitioning of Knowledge process is job of specialist

Choose the right specialist for diagnostics, process mapping and program management

Consulting approach required

Focus on solution design instead of adoption of processes as is Beware of delivery constraints (Ramp up times etc) Program evolution to be aligned to delivery constraints Structured approach to sales and program management is necessary and so is seamless interaction between operations team with Sales and PM team

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Commercials
 Strong P&Ls at the program level is particularly necessary for high end processes.
Both current as well prospective profitability is important Higher Seat Utilization is not always possible in KPO because of adhoc nature of work Watch out how you begin!!

  

Technologies are getting intelligent: redundancy of existing Knowledge processes Beware of hidden costs in KPO: there are many! Pricing approach (whether FTE or UTP or hybrid or time based or deliverable) depends on firm specific factors, process specific factors and program specific factors Management
Innovation and flexibility necessary Should be a derivative of business model
Re-engineering tasks Improving processes Automation Re-allocation of infrastructure costs costs Time sheets People management Invoicing

Be scientific about pricing to the extent possible and to the extent possible be transparent with client on costs included
`

Transitioning Initiating Offshoring Process mapping Documentation Knowledge transfer and training

Diagnostics Pilots projects Cost of subcontracting

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Contracts
 Difficulties in defining SLAs
KPO Programs begin with mostly ad hoc or customized projects (sometimes as proof of concept) Shorter contracts (?) Standard times difficult to define. TAT could vary between 1 day to 20-30 days for complex projects Regular reporting work to ad hoc project work may be 20:80 No pre-defined process for creating deliverable

Customization of contracts: Do not depend on master template.

E.g. analytics processes are different from Market Research processes Continuum of complexity

  

Let the business model define the contract

Need to contemplate on the governance structures before signing the contract

Distinguish between transition phase and stability phase

Define stability phase & criteria for different set of projects

Update the Scope of Work consistent with service delivery.

Updation frequency will be greater than the normal BPO.
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Service delivery
 Emphasize consulting delivery model at the strategic level
Focus on solution design Invest in developing newer knowledge products (Supply creates the demand!)

 

Partnerships with specialized vendors may be necessary Solution design Centers/Centers of Excellence Learning academies Tie ups with academic institutions will become necessary

Right Recruitment is the key

Knowing the DNA of skills sets is must

24 x 7 operation in KPO processes is not always desirable

Single country multiple location service operations to multi-country can help achieve this. Multi-Country operations & Global delivery model also paves way for stronger BCP.

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Where to draw the line?

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Thank you