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Knowledge Process Outsourcing The success in outsourcing business process operations 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 all underlying expectations in offshoring high-end processes . The Knowledge Process Outsourcing is becoming the high valuable interests of companies for their business strategies and protection of intellectual property rights. Many experts see that, within the next 10 years, Knowledge Process Outsourcing will be the big trend in the outsourcing marketplace. Knowledge Process Outsourcing involves outsourcing for high-end knowledge work. This includes research and work on intellectual property, equity and finance, analytics, market research and data management, etc. Knowledge Process Outsourcing is highly value added processes in which the achievement of goals is highly dependent on the skills, knowledge and experience of the people carrying them out. Knowledge Process Outsourcing deals with executing standardized processes, involves higher-end services which require advanced analytical and technical skills, knowledge process outsourcing involves legal works carried out at law firms like patent document writing, global filing, search, trademark search, trademark registration, prior art searches, legal advise on infringements, invalidation search, freedom of use search, etc. Areas with significant potential for Knowledge Process Outsourcing includes pharmaceuticals, biotechnology, data search, integration and management services, financial services, research and analytics, technology research, computer-aided simulation and engineering design and professional services, such as business research and legal services. Offshoring research and development in pharmaceuticals and biotechnology also holds great potential for Knowledge Process Outsourcing. Knowledge Process Outsourcing is not an extension of BPO as the premise of a Knowledge Process Outsourcing is to include it into a global delivery team, the requisite skills that support an organization’s core processes. While Knowledge Process Outsourcing is driven by the depth of knowledge, experience and judgement; BPOs in contrast are more about size, volume and efficiency, the report states. According to a report by GlobalSourcingNow, the Global Knowledge Process Outsourcing industry is expected to reach USD 17 billion by 2010. A report by Evalueserve predicts that India will capture more than 70 percent of the Knowledge
Process Outsourcing sector by 2010. Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also expected to join the Knowledge Process Outsourcing industry.
Knowledge Process Outsourcing
The evolution and maturity of the Indian BPO sector has given birth to yet another wave in the global outsourcing scene: KPO or Knowledge Process Outsourcing. The success in outsourcing business process operations 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 all underlying expectations in offshoring high-end processes to India.
India's intellectual potential
The myth that Indian companies can only provide "software coolies" is soon changing to the reality of Indian companies being capable of almost anything, even rocket science! India has a large pool of knowledge workers in 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 the outsourcing of high-end processes to low-wage destinations. Hence Knowledge Process Outsourcing involves offshoring of knowledge intensive business processes that require specialized domain expertise.
The future of KPO
According to a report by GlobalSourcingNow, the Global Knowledge Process Outsourcing industry (KPO) is expected 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, compared with the current figure of 25,000 employees. A report by Evalueserve predicts that India will capture more than 70 percent of the KPO outsourcing 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. In contrast, the global market is poised for an expected CAGR of 46% by 2010. The following figure demonstrates 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 KPO
KPO delivers high value to organizations by providing domain-based processes and business expertise rather than just process expertise. These processes demand advanced analytical and specialized skill of knowledge workers that have domain experience to
their credit. Therefore outsourcing of knowledge processes face more challenges than BPO (Business Process Outsourcing). Some of the challenges involved in KPO will be maintaining higher quality standards, investment in KPO infrastructure, the lack of talent pool, requirement of higher 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 has been ranked the most preferred KPO outsourcing destination owing to the country's large talent pool, quality IT training, friendly government policies and low labor costs. India is well equipped to meet this emerging sector's challenges and all set to be the global KPO hub.
Advantages of Outsourcing The Outsourcing market is estimated to grow tremendously in the coming few with an increasing number of companies planning to outsource both low end and high end jobs to offshore destinations. Also the number of companies providing outsourcing services is on the rise, thus resulting in larger variety. Due to the fact that more and more companies are outsourcing, the risks are getting smaller as businesses have more experience and clearer objectives. There are several marked advantages of outsourcing: 1. Concentration on core business areas Back office operations of a company require high maintenance and specialized attention. Yet most of them are critical for the company's everyday activities. By outsourcing their back office operations businesses can concentrate on their core competencies while their back office operations are being managed smoothly by a specialized third party company. 2. World-class technology at lower rates Investing in new technology is very costly and often risky. As the technology market develops rapidly, it is difficult to keep up with latest innovations and solutions. Thus outsourcing to companies that have the resources, expertise and desire to continuously update their technological solutions, offers a true advantage of outsourcing. 3. Skilled manpower at affordable prices Outsourcing gives a company the ability to get access to skilled and trained man power at extremely low rates. This in turn leads to an increase in productivity as well as cost savings. By outsourcing a company saves on recruitment, training and other human
resource costs it would otherwise have to maintain internally. Also an advantage of outsourcing is that a company is able to utilize the kind of expertise it could not internally provide. 4. Increased productivity By employing skilled manpower in larger numbers at lower costs companies can really increase their productivity. This in turn would result in better customer satisfaction and increased profitability. 5. Beat Competition In today’s fast paced global economy a company needs to provide high-quality services to its customers in order to retain them, as well as provide the services for cheap prices. Outsourcing in this case can help the company maintain lower rates with better service solutions, thereby giving them a better market position or even a competitive advantage. 6. Tax benefits By selecting the right BPO destination companies can save up on taxes in turn saving on costs. Benefits of Outsourcing The Outsourcing market is estimated to grow tremendously in the coming few with an increasing number of companies planning to outsource both low end and high end jobs to offshore destinations. Also the number of companies providing outsourcing services is on the rise, thus resulting in larger variety. Due to the fact that more and more companies are outsourcing, the risks are getting smaller as businesses have more experience and clearer objectives. Outsourcing in the world today is seen as a strategic management option rather than just a cost cutting operation. It aids companies to achieve their business objectives through operational excellence and a better market position. In order for companies to focus on their core competencies, all companies today outsource one or more of their operations. In order to compete in the global economy companies need to focus their resources on their core operations. Many companies today are outsourcing for example their human resource department, their financial department and their marketing department. The benefits of outsourcing thus include professional manpower, cutting-edge technology and cost savings. Through outsourcing companies receive flexibility in decision-making and companies are able to quickly set up or change certain operations or processes depending on the requirements at hand.
The short term benefits gained through outsourcing: • Ability to focus resources and attention on core business processes. • Reduced human resource management costs • Access as needed to specialized resources • Refinement of risk management, project management, and service delivery abilities. • Implementation of demand management and service delivery disciplines. • More accurate process management and support operations. Typical long-term benefits include: • More predictable results-based budgeting for the outsourced function over the period of a certain outsourcing agreement. • Joint and interactive problem solving and creativity. • Superior management of the business operations portfolio. • Better management, contracting, and outsourcing integration skills.
Pro and Cons of Outsourcing Outsourcing has many advantages but at the same time it has some disadvantages that cannot be ignored. So let us look at some outsourcing pros and cons. Pros of Outsourcing Outsourcing as a trend has come into major scrutiny by the workers and media alike in the developed countries. But most economists are sure that this condition is just a temporary one and will die down as conditions develop and people start taking a mature outlook towards outsourcing. The Outsourcing advantage lies in the fact that it helps companies cut costs and stay ahead in the competition. Outsourcing also benefits the citizens in developed counties as it provides high quality products at a cheaper rate also with better customer service. Advantages of Outsourcing • Companies can save up on operational costs. In fact most companies can cut their operating costs to half by outsourcing • Get access to cheaper and more efficient labor • Cut up on labor training cost • Get access to better technologies at a cheaper cost • Increase productivity • Concentrate on core competencies Companies today want to make use of the outsourcing advantage in order to progress and stay abreast of the competition. This is the reason why more and more companies
irrespective of certain failures are entering the race of outsourcing. Cons of Outsourcing Outsourcing is seen by companies in developed countries and workers in developing countries as a boon. But is the situation really that green? Let us look at some disadvantage of outsourcing. Disadvantages of Outsourcing • The company that outsourcers can get into serious trouble if the service provider refuses to provide business due to bankruptcy, lack of funds, labor etc • Outsourcing requires the control of the process being outsourced by transferred to the service provider. Thus the company may loose control over its process • The service provider in developing countries generally services many companies. So there are many chances of partiality owing to more payment by other parties • The current employees in the company that outsourcers may feel threat due to outsourcing and may not work properly • The attitude of people in the developed countries against companies that outsource is generally bad These disadvantages are the reasons why companies should think twice before outsourcing. Companies should adopt a planned approach towards outsourcing taking into account the interests of employees and customers alike and come up with a balanced advance. Outsourcing services simply to beat competition or to follow your competitors can lead to problems in the future.
Outsource your Knowledge Processing Requirements to O2I
If you are considering outsourcing your knowledge processing needs, or would just like to know more about the various KPO services that can be outsourced to India, check out O2I's Knowledge Process Outsourcing Services. We have specialized departments that focus on various areas of Knowledge Processing Outsourcing.
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