Knowledge Process Outsourcing (KPO) Overview

KPO is a form of outsourcing, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost.

KPO’s have evolved from BPO’s.

KPO’s 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.

Some of the hot destinations for KPOs other than India are Russia, China, Czech Republic, Ireland and Israel.

What is a KPO?

NEED FOR KPO

1. Accelerate Reengineering Benefits2. Access to Top Class Capabilities3. Cash Infusion4. Free Resources for Other Purposes5. Function Difficult to Manage or

Out of Control 6. Improve Company Focus7. Make Capital Funds Available8. Reduce Operating Costs9. Reduce Risk10. Resources not Available Internally

Stabilization2005-2010

Consolidation(2002-2004)

Evolution of Knowledge Services in India

• 1997 - GE Capital Services establishes its back office operations

Growth(1999-2001)

Inception(1996-1998)

• 1993 - iGate Global Solutions (formerly Mascot systems) establishes its offshore center in Banglore

• 2000 – Third Party market competition increases with Mphasis, FreshMind and Office Tiger opening their operations

• 2001 –Evalueserve, Irevna and Netscribes enter as Third Party providers

• Start of knowledge services

• Captive players enter the Indian market

• Large captive players enter the market

• Third Party players start cropping up

• Competition among Third Party players heat-up

• Market consolidation• Collaborations between

Third Party player

• 2004 – ICRA and Bytes to Knowledge (B2K) collaborate to form Brickwork to offer financial services

• Captive Players to increase foothold in the Knowledge Services market.

• Market Share of Captive Players expected to increase to 68% in the year 2010 from the current 62%

• Industry will comprise few large third party players along with the captives.

• Very few boutique firms likely to exist on a standalone basis

• Independent research for investment banks and large businesses to show traction going ahead

Characteristics:

Examples:

Difference between KPO and BPOKPO BPO

Outsourcing of knowledge intensive business process and activities

Outsourcing of standard business process

Value, time to market, scale, flexibility are the primary drivers, then cost

Cost is the primary driver

Knowledge creation process is not well defined

Processes are mostly standardized

Industry is evolving and clients are still learning

Industry is mature and outsourcing components easily carved out

Clients perceive risk of data security and IP leakage

Most of the risk have been addressed by infrastructure, processes .

Domain expertise (depth) more important than size

Bigger the better: economies of scale is a competitive advantage

Finding skilled talent is the biggest challenge

Managing attrition is the biggest challenge

The spectrum of Knowledge ServicesBusiness Research

Economics Research Company and Industry

Research Documentation & Library

Services

Investment Research

Corporate Finance Financial Modeling and Analysis Investment Banking Support

Market Research Data Acquisition and Data Entry Data Processing Presentations

Information Management Database Creation Quantitative/Financial Statement

Analysis Data/Information Synthesis

Legal Research

Legal, Para-Legal Content and Services Drafting, Review of Documents and

Contracts Legal Research (Case History)

Sourcing Management

Spend Data Analysis & Supplier intelligence Low cost country sourcing Advisory Services

Intellectual Property Research Patent Drafting and Filing, Patentability Assessment Overlap Analysis, Competitor IP Landscaping IP Portfolio Management, IP Licensing &

Commercialization

Analytic Services Data Warehousing Data Preparation, ETL services MIS & Reporting Business Intelligence Statistical and econometric Modeling Optimization modeling and OR

solutions

Technology Research

IT Services Application development and maintenance Security Internet & E- commerce

Knowledge Services

Functions Of KPO• Analyzing data and procure information to produce meaningful documents. • Researching information database from various sources. • Converting raw un-transcribed technical data into presentable documents.

• Use of high levels of conceptualization and theoretical knowledge.

• Proficiency with various advanced software and hardware devices.

• Maintaining workflow, meeting deadlines, and applying quality controls.

India’s Competitive advantage vis-à-vis other nation

The service sector accounted for 51% of India’s GDP in 2003 Estimates that the share of service sector is expected to rise to 57% in 2010.

51

57

48

50

52

54

56

58

Market Share (%)

2003 2010

Year

Share of service Sector in india's GDP

India’s Market Trends

Source : Evalueserve

Key emerging issues for KPO

Contracts How to define SLA’s for KPO process Duration of contracts?

Pricing

How to sustain the value proposition to the client?

Maintaining healthy P&L

Governance Structures Onshore offshore mix Unbundling of roles: Sales/Program

Management/Operations

Service Delivery How should operations be organized

for better financials and delivery conforming to client expectations?

Selling & Transition

Best practices for transition? Strategies for growth of KPO accounts?

Quality & Risk Management Business Continuity Information security & compliance Inventorize information assets

MARKETING STRATEGY DEVELOPMENT

PRODUCT STRATEGY

VALUE PROPOSITIONQuality Global Coverage

Custom/Cost Effective

Attention to detail in every element of Client interaction

Disciplined project management and communication

Accurate and insightful analysis Extensive research infrastructure

Operation centres in India, Romania, China and Chile

Multi-lingual capabilities (50+)

Research conducted in North America, South America, Asia Pacific and EMEA

Local ‘in-country’ support

24 x 5 coverage

Fraction of traditional cost

100% customised Client projects

Multi-industry experience

Highly scalable

PROMOTIONAL STRATEGY

Strengths Large talented pool Quality IT training Low labour costs Success of BPOs Good knowledge of project management skills Supportive government policies Many new areas of specialization are being covered making KPO sector spreading its wings Consideration to quality standards like ISO 900x and Six Sigma Billing rates are lower as compared to billing rates in other countries

WeaknessesImmoral and unethical practices related to handling of crucial data Rising wages The inability to uniformly develop and provide infrastructural requirements as real estate prices are rising in major cities. Inadequate Intellectual Property Rights (IPR) protection regime in India Billing rates are higher as compared to billing rates in BPOs

Opportunities Increasing domain expertise More areas of specialization can be

added to KPOs Ample opportunities for SMEs

Threats Non retention of talent Expected labour supply gap as jobs grow faster than the workforce.

KPO Sector SWOT Analysis

PORTER’S GENERIC STRATEGIES

PORTER’S GENERIC STRATEGIES

PORTER’S GENERIC STRATEGIES

Dealing with competition - market leader Expanding total market -1.New users - market penetration, new-market segment, geographical expansion 2.New uses 3.More usage

DEALING WITH COMPETITION

EVALUE SERVE

• Evalueserve is a pioneer in providing Knowledge Process Outsourcing (KPO) services, a term it coined in 2003 and gave the acronym, KPO. Evalueserve’s services include customised Financial and Investment Research, Business Research, Market Research, Intellectual Property, Legal Support Services, Supply Chain Support Services, and Knowledge Technology. Through the Evalueserve Circle of Experts, it also provides access to a global network of domain experts in all major industries such as Financial Services, Telecom/IT/High-tech, Healthcare, Consumer Goods and Retail, Energy and Utilities, Capital Equipment and Media.

FLATWORLD SOLUTIONS

• Flatworld Solutions presents itself as a one-stop shop, offering a broad spectrum of services focused on specialized business process outsourcing solutions in different industry verticals such ashealthcare, logistics, insurance, finance, engineering and mortgage

SERVICES OFFEREDEVALUE SERVE FLATWORLD SOLUTIONS

• Call Center Services• Data Entry Services• Engineering Services• Healthcare Services• Financial Services• Software Development• Photo Editing• Transcription Services• Design Services• Research & Analysis• Web Analytics• Virtual Assistant• Writing Services• Customs Brokerage

Workflow Process: Evalueserve has developed its own proprietary customisable workflow system.

Flatworld Solutions’ Five Stage Outsourcing Process

PROMOTIONAL STRATEGIES

EVALUE SERVE- PROMOTIONEvalueserve is sponsoring IQPC’s Global Patent Congress on 21-22 September 2010 in Copenhagen. Nitin Chaudhary, Manager IP & Legal Services at Evalueserve, will be speaking on ‘Identify opportunity areas for new innovations through examination of existing patent portfolios’:

PLACEMENT STRATEGY-FLATWORLD AND EVALUE SERVE