The New Face of Outsourcing: Knowledge Process Outsourcing

Outsourcing entered the global business scene in the 1980s, and has changed the way it looks, feels and functions since then.

Knowledge process outsourcing or KPO refers to the outsourcing of knowledge intensive tasks and functions to experts overseas or outside of your organization. In this age of competition, companies are increasingly turning to specialization for improving cost and time feasibility and increasing efficiency.

They focus on core functionalities and outsource the rest. With knowledge intensive areas entering the fray, it allows organization the flexibility and provides the resources for the business growth of the organization. Quite different from Business Process Outsourcing (BPO), KPO signifies high end value added tasks in which execution depends on skill, expertise, domain knowledge and experience of the experts handling the tasks.

KPO usually includes a segment of Business Process Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). It deals with highly knowledge intensive tasks and activities and focus is on depth of knowledge, experience and judgment. On the other hand, a BPO deals with improving process efficiency and is focused on single processes, size volume and efficiency.

It can be said that the growth and maturity of the BPO industry led to the significant rise of the KPO industry. The success and substantial results achieved by many organizations in outsourcing operational tasks have led them to outsource high end knowledge and skill intensive tasks.

Cost and time feasibility, sound infrastructure, skilled and knowledgeable workforce, and improved quality are some the factors that have worked to the advantage of KPO organizations the world over.

KPOs in India benefit from the easy availability of skilled and trained specialists, technologically advanced infrastructure and advanced communications tools that the country wields.

Knowledge process outsourcing calls for the application of skill, knowledge and expertise pertinent to a high level area of specialization. These prerequisites are 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.

Design, accounting, manufacturing and engineering fields are opening up to the idea of overseas experts handling domain knowledge intensive projects.

Due to the availability of highly skilled task force, sound technical infrastructure and vast domain knowledge and expertise countries such as India and Philippines are leaders in the KPO industry.

This type of work demands essential skills, vast domain knowledge and excellent communication skills (as most clients are overseas) hence, higher education degrees are most often prerequisite to getting employed with a KPO. The KPO industry in India, entails architectural KPO, engineering KPO, accounting KPO and has already expanded to KPO consultancy.

Scopes of KPO

Architectural and engineering KPOs handle design, CAD and drafting related projects that require architects, technicians, dedicated infrastructure and technology. Architecture KPOs in India have earned their place due to the easy availability of highly qualified architects, designers and draftsmen, skilled technicians in the field of rendering, modeling and designing, dedicated technology, communication tools and advanced infrastructure.

The IT segment has also realized the potential of this avenue of outsourcing. Knowledge process outsourcing is believed to increase productivity and improve efficiency. Manufactures and construction companies are also finding it increasingly beneficial to outsource projects rather than invest in infrastructure, staffing, training and compensation for a skilled work force.

Knowledge Process Outsourcing deals with executing standardized processes ok high end skill level depending on analytical and advanced 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 KPO indluence include:

1. Pharmaceuticals

2. Integration and management services

3. Financial services

4. Research and analytics

5. Computer aided simulations

6. Computer aided design (CAD)

7. Engineering design and professional services

Benefits of KPO

The primary benefit of KPOs remains the same i.e cost savings, but it does not end there. KPOs allow the added advantage of leveraging the expertise and experience of seasoned professionals, experts and specialists in their specific areas.

Outsourcing your knowledge intensive projects or parts of your projects allow you the time, flexibility and resources to take on more and more challenging projects. Hence knowledge process outsourcing provides you more than traditional cost feasibility.

Recent Trends in the KPO Industry

According to a report by Global Sourcing Now, the Global Knowledge Process Outsourcing industry is expected to reach USD 17 billion by 2010. A report by Evalue serve 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.

The future of KPOs is not restricted to the ITES sector alone. It spans other sectors like legal research and documentation, business research and analytics, Clinical research, publishing, market research etc.