Knowledge Process Outsourcing (KPO) means information related business task or knowledge-based processes such as research, analysis, consultancy or any other high-level task are outsourced i.e. done by the workers of another company or allocated to the subsidiary of the same organization.
These subsidiaries can be in different countries or geographical location. This is done in order to save resources and costs. KPO firms can take decisions of businesses on the behalf of the parent companies. KPO is nothing but the subset of Business Process Outsourcing (BPO).
Cost-effectiveness, access to the best talent, focus, better utilization of the resources are the advantages of Knowledge Process Outsourcing (KPO). Let us learn about KPO in greater detail.
What is Knowledge Process Outsourcing?
Knowledge Process Outsourcing (KPO) is when difficult, high-level tasks get outsourced by a company to a vendor. So the activities which the company will be outsourcing are core activities.
They require skills, technical knowledge, and expertise. So a company outsources these tasks to another company (vendor) or a subsidiary company located in the same country or sometimes offshores for cost purposes.
As we know, BPO services are also the outsourcing of activities, but non-core activities. So a KPO will be a subset of a BPO. However, KPO involves more core activities with specialized and technical work.
The company outsources to KPO’s for their skilled labor and subject expertise, not to lower their work burden. It is also an opportunity to lower costs because, in developing countries like India, skilled and educated labor is a lot cheaper.
So a KPO is like an umbrella, it covers a variety of activities. So there are many types of KPO’s like market research, legal discovery, financial research, pharma and biotech, data analytics, creative design, technical content writing etc.
As it happens India is one of the leading providers of many of these KPO services, especially in the technical and scientific fields. It is currently a $14 billion industry in India.
Some famous companies providing such KPO services in India are Wipro, TCS, WNS Global, Aditya Birla Minacs etc. And still, this sector continues to grow at a very fast pace. But in recent years India is facing huge competition from countries like China, the Philippines, and the Czech Republic etc.
List of KPO Companies in India
- Sutherland Global Services
- Boston Analytics
- SG Analytic
- McKc (Mckinsey Knowledge Centre)
Advantages of KPO
- Cost-effectiveness: One of the biggest advantages of a KPO is obviously the cost advantage. The company does not have to set up any infrastructure or bear any operational or running costs. And it gets effective, expertizes services at a fraction of the cost.
- Access to the best talent: KPO’s provide the company with the best, most knowledgeable and skilled professionals available in the global talent pool. And if the KPO is in a developing country like India or Philippines then the cost of such talent is also relatively low.
- Focus: Outsourcing some of the processes, allows the company to focus on its core functions. The KPO handles the peripheral functions, and the company can better focus on its core functions and improve their efficiency and results.
- Better Utilization of Resources: If the company outsources the process that is not at the core of their business strategy, it can use the resources it saves in better places. Say a company outsources its supply chain management. Then the resources it saves on this can be utilized to streamline the manufacturing process, R&D activities, better marketing etc.
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Solved Question on Knowledge Process Outsourcing
Q: Are there any demerits of KPO’s? List a few.
Ans: KPO’s can have certain disadvantages in spite of all their benefits. Some such demerits are,
- Lack of confidentiality
- Risk of leaking of sensitive data and private financial information
- The possibility of hidden costs (especially in offshore outsourcing)