The aim of this paper is to understand about Knowledge Process outsourcing ( KPO ) sector and to happen out if India can hold the competitory advantage to emerge as a leader in the country of Knowledge Process Outsourcing in future.
Business Procedure Outsourcing, Knowledge Process Outsourcing, Information Technology, Talent Crunch, Information Technology Enabled Service, Value Chain, Domain Specialization,
Methodology of the survey
This research paper is based strictly on secondary informations. The informations used for the survey is from organisations like NASSCOM ( National Association of Software and Service Companies ) , the studies published on-line by them, and other studies and statistics available from the database resources which include EBSCO & A ; FACTIVA and besides the Internet. The get conceptual understanding the books written on outsourcing, journal articles related to the subject of survey and newspaper articles were besides used.
Outsourcing – The Concept
In today ‘s environment, edifice and keeping competitory advantage is going a challenge for corporate around the universe. Competitive advantage in the market topographic point is derived fundamentally through two agencies. One is by supplying better client value for tantamount cost ( Differentiation ) or tantamount client value for a lower cost ( low cost ) . The ultimate state of affairs to be in will be to supply better value at a lower cost 1. This made concerns to concentrate on cut downing cost and besides to keep or heighten client value. As an result, it became imperative for organisations to concentrate on their “ nucleus competences ” 2. The term “ nucleus competency ” was used by Prahalad and Hamel 3 to cover with capablenesss within diversified houses. Several steps have been proposed how to place alone resources and capabilities4-9. Once the nucleus competences have been identified, organisations wanted to concentrate merely on their nucleus competences and withdrew from everything else. Outsourcing as a tool has taken form based on this rule. The construct of taking internal company maps and paying an outside house to manage them is called Outsourcing. Outsourcing is done to salvage money, improve quality, or free company resources for other activities.
Organizations outsource procedures to leverage on the fact that outsourcing service suppliers could make the same occupation at a fraction of what it costs the organisation to run a in-house section and therefore ensuing is cost salvaging. Based on this, organisations have built inter-organizational agreements with organisations with complementary resource capabilities10-13 or sometime even with competitors14-15.This inter-organizational agreement is non limited to geographical boundaries, but are even made with organisations in different states. The Numberss of such agreements have been on the addition, specifically with mention to the latter16-17.
Profiling Outsourcing Operationss
The value concatenation of Outsourcing Operationss in India is explained below. It is called the BPO ladder. The adjoining figure depicts the assorted degrees of the value chain18. The first degree of operation in the value concatenation is data entry and transition. Call centres and medical written texts autumn under this class of operations. The 2nd degree of the value concatenation is Rule-set processing. In this the worker makes judgements based on regulations set by the client ( Awarding points to frequent flyers of an air hose ) . The 3rd degree of the value concatenation is job work outing. At this degree of operation, the worker is given freedom to utilize discretion in taking determinations. Approving insurance claims and changing recognition card bounds are some of the operations that fall under this class.
The 4th degree in the value concatenation is direct client interaction. In this, the worker straight handles the clients of the clients. Supplying on line service tips and screening out client ailments on line are some of the operations that come under this degree of the concatenation. Finally, the 5th degree of the value concatenation is where workers are able to give expert cognition services for their clients. In this degree high-end services like research and analysis are outsourced cognition. The companies supplying services at this degree latter refuse themselves to be called BPOs they call themselves as KPO ( Knowledge Process Outsourcing ) companies.
Knowledge Process Outsourcing – Defined
It ‘s non merely a ‘B ‘ in BPO replaced by a ‘K ‘ . KPO is involved in services like Valuation & A ; Investment Research, Patent Filing, Financial Research, Market Research and Financial Services, Media Processing, Publishing & A ; Database Management, and Corporate Planning of big Fortune 500 companies etc.
The new phenomenon can be defined as ; the off-shoring of knowledge-intensive concern processes that require important sphere expertness is KPO. Unlike conventional BPO where the focal point is on procedure expertness, in KPO the focal point is on cognition expertness. The difference lies in sphere specialisation. A BPO employee, by and large, does non necessitate cognition of a particular field. For case, all that a client cares executive at a BPO needs is cognition of English, ability to joint good and basic computing machine accomplishments. On the other manus, an employee of a KPO that is into equity or fiscal analysis, should possess high-end cognition of histories and finance. He or She should be a Master of Business Administration in Finance or Charted Accountant.
Hence KPO is knowledge-driven, BPO is process-driven ; KPO needs specialised expertness, BPO can make with kick alumnuss or even undergraduates who have merely good bid over spoken English. KPO employees require non merely domain specialisation, but besides good cognition of English and Information Technology. A Charted Accountant may be really good at histories but if he is non adept in English or deficiencies Information Technology accomplishments, he is unfit to present services to a cognition procedure outsourcing company. Peoples with all three qualities- Domain Specialization, English Proficiency and Information Technology accomplishments are the best tantrum to take up a occupation in KPO.
The KPO -Fact File
Harmonizing to NASSCOM, the planetary KPO market is expected to turn at a Accumulative Annual Growth Rate ( CAGR ) of 46 per cent, from $ 1.2 billion in 2003 to $ 17 billion by 2010 19. Comparing this with the anticipation for the low-end outsourcing services market, the BPO is expected to hold a CAGR of 26 per cent, from $ 7.7 billion to $ 39.8 billion in the same period.
Harmonizing to a study by GlobalSourcing now, the Global Knowledge Process Outsourcing industry ( KPO ) is expected to make USD 17 billion by 2010, of which USD 12 billion ( about 70 % ) would be outsourced to India entirely. Indian KPO sector has already taken stairss in using extremely educated and talented people and figure of KPO professionals is expected to traverse more than 250,000 by 2010 compared to the current figure of 25,000 employees. Fig 1.2 suggests that expected Growth in Global BPO and KPO Markets ( 2003-2010 )
KPO – The Critical Success Factors
The chief advantage for India to stay a bow smuggler in the BPO sphere is its location advantage, inexpensive and copiously available English speech production labour. The concern theoretical account was a cost centric theoretical account. The factors like location advantage, inexpensive and copiously available English speech production labors are necessary but non sufficient for India to be successful in the KPO sector, as the other factors that are critical for success include Domain Specialization and Information Technology Skills. Looking at the rate at which the KPO sector is turning and looking at the estimations reported by GlobalSourcing, it is really clear that there would be desperate demand for professionals with all accomplishments listed in the critical success factor of KPO.
The Fig 1.3 shows the figure of professionals employed in the ITES Sector from 1999 to 2006. The information shown is sing the full ITES sector, which include BPO and KPO. Looking at the growing rate during this periods, there an mean growing of 30 % in the figure of people employed in the ITES sector. Harmonizing to GlobalSourcing, the figure of KPO Professionals employed is about 25,000 during 2004-05 and the expected KPO Professionals needed by 2009-2010 is about 250,000, which is a ten-fold addition in a span of five old ages. The following inquiry is will India hold the required eligible professionals to be employed he KPO sector?
Will copiously available qualified work force exist for KPO?
Cheap and copiously available adult male power was one of the important factors for India success narrative in the BPO ‘s sector. Low cost work force who are qualified and have the needed sphere expertness and engineering accomplishments are the critical for the KPO ‘s success. Table 1.4 and Table 1.5 gives an thought that about the Knowledge capital of India.
Sing the Table 1.4 and Table 1.5 and besides sing the fact that merely a little fraction of the qualified labour force can be considered suited for employment in companies runing in the planetary sphere ( Neha Kaushik, 2006 ) it is revealed that the figure of occupations in India are turning faster than the entire employable work force. Looking at the statistics of the alumnuss from the B schools, it has been found that all the 2,000-odd IIM and top 10 B-School alumnuss are employable, while less than half the 84,000 alumnuss from Tier-II B-Schools would do the class and the ground being hapless cultural tantrum and communicating accomplishments. ( Shalini Singh, 2006 )
The decision is for certain cognition procedure outsourcing Idaho traveling to be the following large moving ridge and India can hard currency on the following large chance provided high degrees of quality criterions are maintained in instruction which can enable India to bring forth endowment with a proper cultural tantrum and with first-class communicating accomplishments. Besides investing in substructure has to be done on war terms with enhanced hazard direction schemes, which can enable India to hard currency on the following large moving ridge KPO.