KPO vs BPO

Is India slowly and gradually moving towards the KPO regime? Well this is the buzz which is slowly making
wave this New Year
!"ter achieving success in BPO# India has taken a ste$ "orward to widen its success towards the KPO regime
KPO industry unlike BPO $rovides domain based $rocesses and business e%$ertise KPO is more like a challenge
as it demands advanced and e%$ertise skills on $art o" its em$loyees BPO on the other hand is more or less
like a commodity business which stretches more on in"ormation technology and its various sectors
BPO signi"icance
No matter KPO is a ste$ ahead o" BPO but this does not mean the end o" BPO &he BPO Industry will continue
to be success"ul in India BPO has its own way to solve a $articular $roblem &he BPO market is long term in
nature as com$ared to the KPO market With every $assing day the BPO market base is e%$anding and so is
the various $rocesses outsourced through it
BPO undertakes
'ata $rocessing
Basic data entry
(etting u$ o" a bank account
'e$artment Outsourcing
Provides technical su$$ort
Provides email su$$ort to its customers
)ven a"ter the entry o" KPO in the Indian market BPO will continue to derive higher revenues as com$ared to
the KPO industry &he BPO e%$orts will be as higher as *+, billion by the end o" +,-, By a recent study done
by e%$erts the BPO industry is e%$ected to grow globally at a .!/0 o" over +1 $ercent by +,-,
KPO (igni"icance
&here is no doubt that KPO will be the ne%t big thing a"ter BPO KPO unlike BPO is not 2ust restricted to
in"ormation technology It s$ecializes in various other challenging sectors namely business research# .linical
research# Intellectual $ro$erty research etc
&he KPO e%$orts are estimated to be around *-+ billion at the end o" +,-, &he "uture o" KPO a$$ears to be
bright and is e%$ected to achieve a high end o" BPO at the end o" +,-, &he KPO regime looks all set and
$oised to acce$t the new challenges o" high training cost and a much higher attrition rates &he shorter term
contracts will demand high 3uality work and skills on $art o" its workers KPO industry has acce$ted all these
challenges and is all set to leave a mark 2ust like the BPO brigade
Knowledge Process Outsourcing
&he evolution and maturity o" the Indian BPO sector has given birth to yet another wave in the global
outsourcing scene4 KPO or Knowledge Process Outsourcing &he success in outsourcing business $rocess
o$erations to India has encouraged many "irms to start outsourcing their high5end knowledge work as well
.ost savings# o$erational e""iciencies# access to a highly talented work"orce and im$roved 3uality are all
underlying e%$ectations in o""shoring high5end $rocesses to India
India's intellectual potential
&he myth that Indian com$anies can only $rovide 6so"tware coolies6 is soon changing to the reality o" Indian
com$anies being ca$able o" almost anything# even rocket science7 India has a large $ool o" knowledge workers
in various sectors ranging "rom Pharmacy# 8edicine# 9aw# Biotechnology# )ducation : &raining# )ngineering#
!nalytics# 'esign : !nimation# 0esearch : 'evelo$ment# Paralegal .ontent and even Intelligence services
&his talent is soon being discovered and ta$$ed by leading businesses across the globe resulting in the
outsourcing o" high5end $rocesses to low5wage destinations ;ence Knowledge Process Outsourcing involves
o""shoring o" knowledge intensive business $rocesses that re3uire s$ecialized domain e%$ertise
The future of KPO
!ccording to a re$ort by /lobal(ourcingNow# the /lobal Knowledge Process Outsourcing industry <KPO= is
e%$ected to reach >(' -? billion by +,-,# o" which >(' -+ billion would be outsourced to India In addition#
the Indian KPO sector is also e%$ected to em$loy more than +@,#,,, KPO $ro"essionals by +,-,# com$ared
with the current "igure o" +@#,,, em$loyees ! re$ort by )valueserve $redicts that India will ca$ture more than
?, $ercent o" the KPO sector by +,-, !$art "rom India# countries such as 0ussia# .hina# the .zech 0e$ublic#
Ireland# and Israel are also e%$ected to 2oin the KPO industry
.om$arison o" O$$ortunity in BPO and KPO markets
9ow5end outsourcing services have an e%$ected .umulative !nnual /rowth 0ate <.!/0= o" +1A by +,-, In
contrast# the global KPO market is $oised "or an e%$ected .!/0 o" B1A by +,-, &he "ollowing "igure
demonstrates the e%$ected growth in the BPO and KPO markets over the ne%t seven years
What high5end services can be outsourced to the Indian KPO sector?
;ere are some KPO services that can be outsourced to India 4
0esearch : 'evelo$ment
Business and &echnical !nalysis
9earning (olutions
!nimation : 'esign
Business : 8arket 0esearch
Pharmaceuticals and Biotechnology
8edical (ervices
Writing : .ontent 'evelo$ment
9egal (ervices
Intellectual Pro$erty <IP= 0esearch
'ata !nalytics
Network 8anagement
&raining : .onsultancy
The challenges in KPO
KPO delivers high value to organizations by $roviding domain5based $rocesses and business e%$ertise rather
than 2ust $rocess e%$ertise &hese $rocesses demand advanced analytical and s$ecialized skill o" knowledge
workers that have domain e%$erience to their credit &here"ore outsourcing o" knowledge $rocesses "ace more
challenges than BPO <Business Process Outsourcing= (ome o" the challenges involved in KPO will be
maintaining higher 3uality standards# investment in KPO in"rastructure# the lack o" talent $ool# re3uirement o"
higher level o" control# con"identiality and enhanced risk management
.om$aring these challenges with the Indian I& and I&)( service $roviders# it is not sur$rising that India has
been ranked the most $re"erred KPO destination owing to the countryCs large talent $ool# 3uality I& training#
"riendly government $olicies and low labor costs
India is well e3ui$$ed to meet this emerging sectorCs challenges and all set to be the global KPO hub7
KPO re"ers to knowledge5intensive work that involves s$ecialized domain e%$ertise ;igh value $rocesses that
"all into this realm4 valuationD researchD investment researchesD $atent "ilingD and legal and insurance claim
analysis &hat would certainly include customer analytics and related $rocesses
W;I9) O>&(O>0.IN/ is $resent in numerous business "unctions# including manu"acturing# legal# "inancial and
human resources# it is the term BPO <Business Process Outsourcing= that is largely in the news on a daily basis
IndiaCs ca$abilities in this area have been moving towards enhancing the nature o" the work done Erom mere
data entry kind o" work# the "osus has shi"ted to transaction $rocessing Now# there is a nascent move towards
knowledge $rocess outsourcing <KPO=
>nlike in BPO where the "ocus is on e%ecuting standardised routine $rocesses# KPO involves $rocesses that
demand advanced in"ormation search# analytical# inter$retation and technical skills as well as some 2udgment
and decision making )%am$les o" KPO "unctions are intellectual $ro$erty or $atent research# 0:' in
$harmaceuticals and biotechnology# data mining# database creation# and a range o" analytical services such as
e3uity research# com$etitive intelligence# industry re$orts and "inancial modelling 8any o" these activities lend
themselves to remote e%ecution "rom anywhere
&y$ical users o" KPO services include market research and consulting "irms# investment banks and "inancial
services institutions# industry associations# media# $ublishing and database "irms# and cor$orate $lanning
de$artments o" large Fortune 500 com$anies (everal global $layers such as 8cKinsey# /oldman (achs#
0euters# I8( ;ealth# ;arris Interactive# I$sos# 8aritz# !. Nielsen# &N,( and the WPP grou$ are already using
India as a remote base
&he KPO Falue .hain
&y$ically# the e%tent o" o""shoring is a "unction o" the degree o" e5enablement $ossible and the 3uality o" the
human ca$ital re3uired (ome activities such as $aralegal and medical transcri$tion re3uire low 3uality human
ca$ital as com$ared to activities such as data mining and analysis# engineering design and e5learning &he
latter are also highly amenable to I& enablement Other services such as legal consulting# intellectual $ro$erty
research and strategic consulting re3uire the highest level o" human ca$ital and are the least amenable to I&
enablement
! veritable gold mine
.om$anies in the KPO s$ace thus need to make the transition "rom o""ering services that re3uire low human
ca$ital 3uality and low I& enablement to those that re3uire a high degree o" human ca$ital and I& enablement
&he National !ssociation o" (o"tware and (ervice .om$anies $ro2ects that the total global o""shoring market
o$$ortunity by +,,G will touch *-B- billion O" this# data search# integration and management will account "or
*-G billion 8edical# legal content and associated services re$resent an o$$ortunity o" *+ billion ;owever#
(co$e e5Knowledge .enter estimates that only B@5@, $er cent <about *1@5?, billion= o" the total o""5shoring
o$$ortunity is likely to be realised even by +,-, !ccording to (co$e# the global o""shore BPO <non5I&= revenue
in "iscal +,,H was close to *I billion and this is e%$ected to grow by about H@ $er cent a year through +,,G
BPO5
Business Process Outsourcing <BPO= is the leveraging o" technology or s$ecialist $rocess vendors to $rovide
and manage an organisationCs critical andJor non5critical enter$rise $rocesses and a$$lications &he most
common e%am$les o" BPO are call centres# human resources# accounting and $ayroll outsourcing Business
$rocess outsourcing may involve the use o" o""5shore resources
>se o" a BPO as o$$osed to an a$$lication service $rovider <!(P= usually also means that a certain amount o"
risk is trans"erred to the com$any that is running the $rocess elements on behal" o" the outsourcer BPO
includes the so"tware# the $rocess management# and the $eo$le to o$erate the service# while a ty$ical !(P
model includes only the $rovision o" access to "unctionalities and "eatures $rovided or Cserved u$C through the
use o" so"tware# usually via web browser to the customer