Knowledge Process Outsourcing: A Value Proposition

Abstract

In this paper an attempt has been made to study how and why the outsourcing have started moving up the value chain. An explicit distinction has been made between Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO). Findings indicate that, after demonstrating its success in information technology, outsourcing has started moving up the knowledge continuum to tasks that involve expertise and judgment, as opposed to routine tasks. The Knowledge Process Outsourcing industry (KPO) is expected to grow 45% in size by 2010. Global KPO pie in 2010 will be around $17 billion of which $12 billion (70%) will be outsourced to India. Therefore, India’s BPO industry will soon be edged out by the emerging Knowledge Processing Outsourcing (KPO) sector and it will prove to be the biggest revenue grosser in future. India is most definitely very well placed to take advantage of this opportunity. But replicating the success of BPO in KPO would be a challenging task since there are different processes involved in each of them. It requires domain expertise and therefore it is important for KPOs to develop expertise in few areas and excel in them, so as to meet varied customer requirements. The challenges faced are manifold but still India can emerge as a major KPO player in the global arena by leveraging the intellectual capital and the power of the Internet to offer quality research at value prices. Although cost effectiveness is key, Best Value principles should dictate the reason for outsourcing. Outsourcing solutions for high-end processes are usually customized and value-based. It will be this customization that will enhance the value proposition of KPO. This study also examines the present state of KPO in India and its desired role in the new economic scenario and in light of these findings, the study suggests imperative factors for the success of KPO.