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-KPO: An Overview

Knowledge Process Outsourcing (KPO) is one step ahead of Business Process Outsourcing (BPO). It started

emerging in India around the turn of the century, when the global industries realized that apart from

software development and technical support, knowledge work could also be outsourced. It involves

transfer of business processes to other geographic locations; specialized domain specific knowledge and

business expertise of a higher level rather than just process expertise.

 The following are the areas associated with the KPO sector.

• Animation & Design

• Advanced Web Applications

• Business and Technical Analysis

• Business & Market Research

• Data Analytics

• Financial Consultancy and Services

• Intellectual Property (IP) Research

• Learning Solutions

•Legal Services

• Medical Services

• Network Management

• Pharmaceuticals and Biotechnology

• Research & Development

•  Training & Consultancy

• Writing & Content Development

Many companies have started outsourcing their high-end processes like Market Research (MR), Equity

Research, Engineering Design, Intellectual Property Rights (IPR), Legal Services, Remote Education and

Publishing Operations to India after the success of BPOs. These companies outsource their processes to India

for:

• Cost savings

• Operational efficiencies

• Access to highly skilled workforce

• Improved quality

A KPO can provide quality work and on- time delivery with uninterrupted services. KPOs are the next big

thing in the outsourcing sector. Initially, KPOs focused on data collection, updating financial models, patent

searches and basic data mining. But now KPOs have also started focusing on sector insights, equity research,

patent analytics, high end data mining, analysis and recommendation. Some of the hot destinations for KPOs

other than India are Russia, China, Czech Republic, Ireland and Israel.

Difference between KPOs and BPOs: We can say that KPOs emerged from BPOs.

BPO KPO

• It provides services like customer care,

technical support through voice processes,

tele-marketing, sales, etc.

• KPO provides in-depth knowledge,

expertise and analysis on complex areas like

Legal Services, Business & Market Research,

etc.

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• Low end services

• Process expertise

• Pre-defined processes

• It employees not- so- qualified workers

as it focuses on communication skills

• High end services

• Knowledge expertise

• Requires application, understanding of 

business and analytical bent of mind

• It involves skill and expertise of 

knowledge workers with excellent educational

background.

 

KPO Sector Outlook 

 The share of Indian KPO sector was 56 percent of the global KPO sector in 2003. By 2010, Indian KPO sector

will have 71 percent share of the global KPO sector. Russia, Ireland, Philippines, China, Czech Republic and

Israel are also entering the KPO industry.

In 2003, USD 0.72 billion revenue was generated by the Indian KPO industry, contributing around 0.24 % to

the Indian service sector. This figure is expected to reach 1.78 % by 2010. A CAGR of 49.5 % is expected by

Indian KPO sector between 2003 and 2010.

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As estimated, the BPO exports will be $20 billion and KPO exports will be $12 billion by 2010. The BPO

industry will grow globally at a CAGR of 26% and the KPO industry will grow globally at a CAGR of 44.5% till

2010.

Out of the $17 billion in KPO sector by 2010, the contribution of the 6 main sectors will be as shown above.

No of Employees:

 The industry presently employees 25,000 people and is expected to grow to 250,000 employees by 2010, as

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o  Telecom R&D: Qualcomm, Nokia, Lucent Technologies, Alcatel, Ericsson.

o Software R&D: Phillips, Microsoft, Baan, Adobe, SAP Labs, BMC Software, IBM, Yahoo, HP,

Sun MicrosysteAuto/Engineeringms, Google.

o Auto/Engineering: Neilsoft, Delphi, General Motors, DaimlerChrysler, Plexion, Quest,

Whirlpool.

 

• Market Research and Analytics: These include services like writing & editing, secondary &

primary research, formatting client reports, conversion of findings to knowledge, etc. Some of the KPOs

working in this area are marketRx, Pipal Research, Evalueserve, Inductis, OfficeTiger, Copal Partners, CRISIL,

etc.

• Writing and Content Development: These include services like content delivery, digitization of 

content, data enrichment & warehousing, pre-press work, proofreading, template designing, text

composition, etc.

• Pharmaceutical and Biotech R&D: These include clinical research, research & development,

drug discovery, etc. Some of the KPOs working in this area are Bayer, GlaxoSmithKline, Biocon, Eli Lilly,

AstraZeneca, Dr. Path Labs, etc.

• Healthcare Services: These include diagnostic, genetic profiling, oncology tests, HIV & allergy,

etc. Some of the KPOs working in this area are Clingene, Avesthagen, Ranbaxy.

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• Education and Training: These include private tutorials, curriculum design, K-12, teaching,

content development, etc.

Scope of KPO Sector

KPOs have evolved from BPOs. KPOs were introduced in india by McKinsey when it first set up

a knowledge center in india in 1987. But KPOs actually started coming up in India in 2000

when many companies like OfficeTiger, GE, Gartner, etc opened their research centers

here. From 2000 to 2005, KPOs were in their growing stage. And during this duration,

India became a leading destination for KPOs.

Let us have a look at the current status of the KPO sector in India.

Current Scenario

"Indian companies are good for BPO only." The companies in KPO sector are proving this statement to be

wrong. They are showing the world that Indian companies can handle complex work also. India has highly

qualified workers in many sectors like Engineering, Pharmacy, R&D, Biotechnology, etc.

KPO jobs are more challenging than BPO jobs because other than process expertise, KPO provides domain

knowledge and business expertise, which, in turn, require analytical and highly specialized skills. India is

the hottest destination for KPOs.

India is emerging as a leader in KPO market because of the following reasons:

• Well established IT services and BPO sector

• Excellent project management skills

• Highly qualified professionals• Proficiency in English

• Supporting government policies

Some challenges which KPO industry is facing are as following:

• Expected dearth of domain expert professionals

• High attrition rates

•  Talent retention

• Data security and confidentiality

Growth drivers of KPO sector:

• Shortage of knowledge professionals in countries like USA, UK, etc.

• Low wages labour

• BPOs moving up the value chain

• Single vendor services

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•  Talented workforce

After the success of BPOs, India will be a key player in this sector. India is all set to face challenges and

become a global KPO leader.

Future Scenario

 The future of KPOs in India is bright. Along with creating job opportunities for talented engineers, MBAs,

doctors, lawyers and other professionals, the sector is spreading its wings into different directions which

will finally lead to the development of India.

KPO salaries will be 25-50% higher than those in other fields.

Billing rates for KPOs are higher as compared to BPOs. But billing rates in India are much less than those in

UK or US for KPOs. This makes India save more money and generate more revenue.

Continuous growth is expected in KPO sector in the future as new areas are being added to the existing list

of areas of specialization.

In 2003, the market share of Indian KPO sector in global KPO market was 56%. And it is expected to reach

71% in 2010, which shows a decent growth of the sector in the coming years. According to NASSCOM, KPO

sector worldwide is expected to reach USD 17 billion by 2010. Out of this, India will account for USD 12

billion.

According to Evalueserve, KPO sector is expected to grow at a CAGR of 46 per cent globally. This is possible

as India has the potential to provide cost-effective and quality workforce.

Hurdles in Growth

Low employability despite high graduate turnout because it requires high level skills.

Job opportunities in other sectors are also increasing, thereby further reducing the supply of skilled  

people to the KPO sector.

Supply gap: According to Rocsearch, a UK based Research Company, the KPO sector may only reach $5  

billion by 2010 and 100,000 employees instead of projections of $12 billion market and 250,000 employees.

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In the near future, India will experience a higher rate of growth in KPOs as compared to BPOs. KPO sector will

heavily contribute to the revenue generation and job creation due to its increasing size. Therefore it has a

promising future.

Top Players in KPO

Sector

S. No. Companies

1. Evalueserve (EVS)

2. McKinsey & Company

3. RocSearch

4. Pangea3

5. OfficeTiger

6 Copal Partners

7. Gevity

8. Pipal Research

9. Grail Research

10. Inductis, EXL Service

11. WNS GLOBAL SERVICES

12. ACCENTURE

13. APTARA (TECHBOOKS)

Career Opportunities

KPO sector is growing and so are the job opportunities in this sector. With introduction of new areas of 

specializations in the sector, job opportunities have also increased. And India has the capability of fulfilling

this need of the KPO sector.

KPO prefers employees from diverse academic backgrounds. It helps in getting different perspectives for

delivering quality work to the clients. There will be a strong requirement of engineers, CAs, doctors, MBAs,

lawyers, research analysts, scientific researchers and Ph.Ds in the near future. In-depth domain knowledge

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• Basic interest in the field of work

• Aptitude for working with data and information

• Good communication skills

•  Team work

KPO Asia 2007

KPO Asia 2007 was a two day event in which the renowned providers of KPO services presented their

outsourcing and offshoring skills and solutions. Asia's most experienced outsourcing service provider,

Beyondsoft Group, sponsored this conference. It was held in Singapore on 13th and 14th June. CEOs and

CIOs of various organizations attended the summit. More than 200 participants attended this summit. It

was first of its kind in KPO industry in the Asia-Pacific region. It focused on knowledge services in KPO

sector. This was a great opportunity for outsourcing professionals to make others understand the emerging

trends and innovations in KPO sector. It saved a lot of time and money which would have been wasted in

evaluating the KPO service providers otherwise.

KPO Asia 2007 discussed:

•  The challenges and prospects of shifting from BPO to KPO

•  The outsourcing and offshoring options available in Asia.

• Best practices for getting desirable results.

• Evaluation of outsourcing and offshoring destinations in Asia (India, Singapore, Malaysia, Philippines

and China)

 The content displayed in the exhibition was thoroughly researched so that it could attract the right people

whom the general public would like to meet. These people from the industry had raw knowledge of the KPO

industry. KPO Asia 2007 helped participants in many ways like:

•  Taking leadership positions in KPOs

•  To use the cost effective and wide marketing network in Asia

• Developing relationships through this network

•  To access the global movers and shakers in outsourcing

• Increase brand recognition

• New partnerships and alliances

• Demonstrate products and solutions to audience

• Better understanding the KPO market

• Face-to-face meetings with various industry experts

umbers bit too outstretched

It was estimated that the KPO industry will have a CAGR of 80%-90% i.e. $ 12 billion by 2010. But there is

a possibility that the Indian knowledge process outsourcing (KPO) market will not be able to touch the

projected $ 12 billion by 2010. The projected figure is not easily achievable. This is because the

organizations are still doing selective outsourcing.

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 The growth in KPO market is more than the growth in IT/BPO market. Reasons being:

• Many companies are not comfortable in outsourcing work to third parties. They prefer to do it

themselves.

•  There are so many entry barriers for professionals who are experts in KPO segment. 

If $ 20 per hour is charged (which is the minimum fee being charged) then only $ 8 billion can be achieved

by 2010 but not $ 12 billion. KPOs are growing at a fast rate, but how fast? - this is difficult to find out.

Whereas a recent Evalueserve report says that the KPO industry is doing pretty well and will soon achieve

the targets set. It also says that till 2010 KPO industry will start following the vendor model (buy) instead of 

captive model (make). Also dual outsourcing will increase, i.e. outsourcing work to captives plus external

vendors.

But irrespective of the debate, companies are outsourcing non core activities like accrual services, equity

research, treasury operations, credit decision processes, etc.