All of us are very familiar with the term BPO. BPO dream took off some five years ago and there were icons to follow. Today, BPO’s are loosing its glory as setting up a call centre is expensive; the competition is intense and margins drastically reducing. To add up to all this there is huge number of teenagers working in these bpo’s who change jobs frequently.
Here is when KPO would come to our rescue. Knowledge Process Outsourcing (KPO) is where outsourcers do high-end “knowledge-based” work rather than doing mere backend processing. So, what exactly is KPO?
KPO is essentially an offshoot of BPO. It is the high-end activity of the BPO industry and is estimated to have a magnificent growth in the next few years. It is estimated that the low-end work of BPOs’ will shift to destinations like Bangladesh and Philippines, while India moves over to KPO; which implies moving over from standardized routine processes and data entry kind of work in a BPO, to processes that demand advanced knowledge, analytical interpretation and technical skills. Understandably, the average KPO employee is expected to have better qualifications, skills and knowledge as compared to his/her BPO counterpart.
Fields of work that the KPO industry focuses on include intellectual property or patent research, content development, R&D in pharmaceuticals and biotechnology, market research, equity research, data research, database creation, analytical services, financial modeling, design and development in automotive and aerospace industries, animation and simulation, medical content and services, remote education, publishing and legal support. MBAs, PhDs, engineers, doctors, lawyers and other specialists are expected to be much in demand. The hourly rates for KPO jobs are also higher and are estimated to be approximately thrice that of current BPO jobs.
The biggest question which arises is that will KPO be able to drive out BPO?
The answer is a clear no. Revenues in absolute terms will always be more from BPO. While KPO exports from India are projected at $12 billion by 2010, BPO exports will be much higher at $20 billion for the same year.
But India may start to lose its low-cost advantage in future. Low-end services may move to cheaper destinations like Ukraine, Belarus and Malaysia. Commoditisation of low-end services is likely to occur as potential barriers to entry are minimal. Today, one can open a small call centre within Rs 5 lakh.
In contrast to BPOs, KPOs require understanding of how a client works. The contracts in the KPO industry will be of much shorter duration. They may range anywhere from three weeks to six months.
So, delivering high quality work will be a major challenge. Several Indian BPOs have recognized this opportunity and are in the process of developing KPO capability.
Over the last couple of years small Indian KPOs have emerged and are doing well. It’s MNCs like GE and Evalueserve, with their huge resources, which have been doing well. GE has been hugely successful with its 2,000 strong workforce at its research centre in Bangalore. Efunds has more than 80% of its work force in India. The figure for Evalueserve leaves everyone behind, out of 650 employees globally, 600 are based in India itself.
Now the question arises that how can India be a global player?
Going by the current statistics, the KPO wave is here to stay and Indians can now benefit much more than before. Large talent pools and favorable government policies together make India the most conducive environment for KPO. Several global players such as McKinsey, Reuters are already investing in India. As with the BPO sector, India is cost-effective and provides a vast intellectual talent with expertise in areas such as research and analysis.
Offshore software development companies in India are now increasingly focusing on KPO strategies. India is gearing up; individuals and companies alike are now trying to harness this new wave – the KPO wave.
In future it’s KPO rather than BPO which will be the cutting edge for India.
The author is a Senior Search Engine Optimizer in an offshore software development company in India. The company deals in offshore software development and offshore outsourcing. For more information visit: http://www.otssolutions.com.
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