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What is KPO ?
Knowledge Process Outsourcing or KPO
as it is commonly known is essentially the higher end of the
hugely successful BPO industry. The evolution and maturity of
the BPO sector has given birth to yet another wave in the global
outsourcing scene: KPO or Knowledge Process Outsourcing. The
success in outsourcing business process operations has
encouraged many firms to start outsourcing their high-end
knowledge work as well. Cost savings, operational efficiencies,
access to a highly talented workforce and improved quality are
all underlying expectations in off-shoring high-end processes to
low cost geographies.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. BPO is all about standardized
routine processes and data entry kind of work whereas KPO is
about 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. 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.
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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 countries like India will be the primary
player in the KPO space. Availability of a fairly large talent
pools along with favorable government policies make India one of
the most conducive environment for KPO. Several global players
such as McKinsey, Reuters, Harris Interactive etc are among
others who have already invested 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.
Outsourcing companies in India are
now increasingly focusing on KPO strategies. India is gearing up
to harness this new wave – the KPO wave. Cost savings from
offshoring even a portion of the patent drafting process can
easily save up to 50 per cent of the cost for the end client.
Offshoring R&D in pharmaceuticals and biotechnology is another
area where there is enormous potential for KPO. Destinations
such as India offer significant cost advantages (as much as 40
to 60 per cent) in the areas of contract research and clinical
trials. Companies such as AstraZeneca and GlaxoSmithKline have
recently set up drug discovery centres at low-cost destinations
to offshore R&D activities |
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Chip design and embedded systems is another critical area. All
major integrated design manufacturers such as Motorola, Intel,
Analog Devices, National Semiconductor, IBM, Cisco, Cypress
Semiconductor, Nokia and Philips have set up offshore design
centres is simple. The compensation for a chip design engineer
with a master's degree and five years' experience is about
$7,000 a month in the US.
An engineer with the same
qualification and experience in India gets about $1,200 a month.
Naturally, the cost savings in KPO is enormous. For example,
data-mining services companies can save as much as 60 to 70 per
cent on analytics and inventory management costs by off-shoring
them. The cost differential between PhDs/engineers in the US and
India is almost $60,000 to $80,000.
Quite predictably, law firms such as Patent Metrix,
Cantor-Colburn and Schwegman, Lundberg, and Woessner & Kluth,
have already set up offices in India, and quite a few others are
joining hands with Indian companies to cash in on the emerging
opportunity.
Companies like Evalueserve, GE Caps, MarketRx have set up
centres at low-cost destinations to provide these services. And
more are expected to follow soon.
A major reason why companies in India will have no option but to
move up the value chain from BPO to KPO is quite simple. By
2010, India may have become too costly to provide low-end
services at competitive costs.
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According to various reports the Global
Knowledge Process Outsourcing industry (KPO) is estimated to
reach USD 17 billion by 2010, of which USD 12 billion would be
outsourced to India. The Indian KPO sector is expected to employ
more than 250,000 KPO professionals by 2010, capturing more than
70 percent of the jobs available in the KPO sector by 2010.
Apart from India, countries such as Russia, China, the Czech
Republic, Ireland, and Israel are also expected to join the KPO
industry. Low-end outsourcing services have an expected
Cumulative Annual Growth Rate (CAGR) of 26% by 2010. In
contrast, the global KPO market is poised for an expected CAGR
of 46% by 2010.
Here are some KPO services that are
been outsourced today
• Research & Development
• Business and Technical Analysis
• Learning Solutions
• Animation & Design
• Business & Market Research
• Pharmaceuticals and Biotechnology
• Medical Services
• Writing & Content Development
• Legal Services
• Intellectual Property (IP) Research
• Data Analytics
• Network Management
• Training & Consultancy |
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The high-end KPO opportunities are
immense for Indian firms. For instance, look at some of the figures
pertaining to intellectual property research. Drafting and filing of
patent applications in the US is quite expensive. A typical
application costs about $10,000 to $15,000 to draft and file with
the United States Patent and Trademark Office. Cost savings from
offshoring even a portion of the patent drafting process can easily
save up to 50 per cent of the cost for the end client, according to
Alok Aggarwal, chairman of Evalueserve.
Quite predictably, law firms such as Patent Metrix, Cantor-Colburn
and Schwegman, Lundberg, and Woessner & Kluth, have already set up
offices in India, and quite a few others are joining hands with
Indian companies to cash in on the emerging opportunity. Offshoring
R&D in pharmaceuticals and biotechnology is another area where there
is enormous potential for KPO. Aggarwal says destinations such as
India offer significant cost advantages (as much as 40 to 60 per
cent) in the areas of contract research and clinical trials.
Companies such as AstraZeneca and GlaxoSmithKline have recently set
up drug discovery centres at low-cost destinations to offshore R&D
activities. Chip design and embedded systems is another critical
area. A paper presented by Aggarwal says the reason why all major
integrated design manufacturers such as Motorola, Intel, Analog
Devices, National Semiconductor, IBM, Cisco, Cypress Semiconductor,
Nokia and Philips have set up offshore design centres is simple.
Chip design and embedded systems is another critical area. A paper
presented by Aggarwal says the reason why all major integrated
design manufacturers such as Motorola, Intel, Analog Devices,
National Semiconductor, IBM, Cisco, Cypress Semiconductor, Nokia and
Philips have set up offshore design centres is simple.The
compensation for a chip design engineer with a master's degree and
five years' experience is about $7,000 a month in the US. An
engineer with the same qualification and experience in India gets
about $1,200 a month. Naturally, the cost savings in KPO is
enormous. For example, data-mining services companies can save as
much as 60 to 70 per cent on analytics and inventory management
costs by off-shoring them.
The cost differential between PhDs/engineers in the US and India is
almost $60,000 to $80,000. Companies like Evalueserve, GE Caps,
MarketRx have set up centres at low-cost destinations to provide
these services. And more are expected to follow soon. A major reason
why companies in India will have no option but to move up the value
chain from BPO to KPO is quite simple. By 2010, India may have
become too costly to provide low-end services at competitive costs.
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Article Contributed By: Sukanya
Banerjee
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