KPO is a new phenomenon that is picking pace in India. It is “Knowledge Process Outsourcing”. In simple words it is the upward shift of BPO in the value chain. Old BPO companies that used to provide basic backend or customer care support are moving up this value chain. “Unlike conventional BPO where the focus is on process expertise, in KPO, the focus is on knowledge expertise.”
The advantages of Knowledge process outsourcing are as follows:
(i) Accelerate Reengineering Benefits: Reengineering aims for drastic improvements in critical measures of performance such as cost, service, quality and speed. But the need to increase efficiency comes into direct conflict with the need to invest in core business.
(ii) Access to Top Class Capabilities: Good and competent providers make extensive investments in technology, people, and methodologies. They acquire expertise by working with many clients facing similar challenges.
(iii) Cash Infusion: Outsourcing often involves the transfer of assets from customer to the provider. Equipment, vehicles, facilities, and licences used in the current operations contain value and are sold to the vendor. The vendor uses these assets to provide services back to the client.
(iv) Optimal use of resources: Every organisation has limitations to the resources available to it. Outsourcing allows an organisation to redirect its resources, mostly human resources, from non-core activities toward activities which serve the core need of customers.
(v) Solution to difficult problems: Outsourcing is certainly one option for addressing the problem of managing difficult activities requiring core technical skills. It is essential to remember that outsourcing doesn’t imply abdication of management responsibility nor does it work well as a solution to solve critical and suddenly erupting trouble in a company.
(vi) Focus on main business: Outsourcing allows a company to focus on its core business by having operational non core functions assumed by an outside expert. Freed from devoting energy to these non core areas, the company can focus its resources on meeting its customers’ needs.
(vii) Best use of financial resources: There is a large amount of competition within most organisations for capital funds. The senior management is always in a fix to decide where to invest the capital funds.
(viii) Cost reduction: Companies which attempt to do everything themselves generally incur higher research, development, marketing and deployment expenses, and all of these are passed on to the customer.
(ix) Minimum Risk: Tremendous risks are associated with the investments made by the organisations. Markets, competition, financial conditions, Government Regulations and Technologies all change quickly.
