Knowledge process outsourcing

Knowledge process outsourcing

Knowledge process outsourcing (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. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans.



Knowledge process outsourcing (KPO) is the term used to describe outsourced support that requires deep domain knowledge and the exercise of judgment and interpretation. It differs from traditional BPO / ITO outsourcing, which tends to focus on rules-based processing. KPO typically requires people with higher education, specific skills, and specialized business experience. As the work entails decision-making, offshore teams would need to be more closely integrated with the onshore teams that they support than would be the case in a typical outsourcing engagement. Process transparency is a major barrier to using KPO services.[clarification needed] Many organizations do not track carefully which decisions are made by whom, and rely so much on informal social processes (and "soft skills") that it is unclear how much the use of KPO would disrupt existing operations. However, requirements like Sarbanes-Oxley and radical transparency movements like full cost accounting, shareholder activism and eco-labels and moral purchasing require organizations to be more explicit about when and by whom decisions are made. These trends make it easier for outsourcing non-critical jobs to be considered by qualifying the impact of decisions in advance.[clarification needed] Furthermore, it becomes easier to evaluate and compare success. A fully developed service economy enables KPO by treating all functions as services.[clarification needed] So do more technical trends such as service oriented architecture, enterprise application integration and telework: it is easier to outsource a job if it is already being performed outside the head office. Organizations adopting ISO 9000 and ISO 19011 should also find it much easier to integrate externally provided KPO into their operations and audit them on a fair basis.

As of 2007, most US organizations were hiring foreign professionals under H-1 visas to do jobs in the USA for several years, after which they would return to their home countries as managers to train and supervise others, continuing to report to their former business units.

The following extract from chapter two of the British Computer Society book 'Global Services: Moving to a Level Playing Field' by Mark Kobayashi-Hillary and Dr Richard Sykes attempts to define KPO:

"KPO is merely a continuation of BPO, though with rather more business complexity. The defining difference is that KPO is usually focused on knowledge-intensive business processes that require significant domain expertise (application professionalism in the language of Chapter 1). The offshore team servicing a KPO contract cannot be easily hired overnight as they will be highly educated and trained, and trusted to take decisions on behalf of the client.

IT outsourcing is strongly focused around technical professionalism, and the migration to business process outsourcing introduces this extra dimension of application professionalism. Ever more complex services, as implied by KPO, demonstrate this very well. The profile of people being hired to serve within KPO service companies are more diverse than just being drawn from technical IT services – these are people with MBAs, and medical, engineering, design or other specialist business skills. KPO delivers higher value to organizations that offshore their domain-based processes, thereby enhancing the traditional cost– quality paradigm of BPO. The central theme of KPO is to create value for the client by providing business expertise rather than process expertise. So KPO involves a shift from standardized processes to advanced analytical thinking, technical skills and decisive judgement based on experience."

Types of KPO services

KPO services include the following:

  • Investment research services (equity, fixed income and credit, and quantitative research)
  • Business research services
  • Data Analytics
  • Market research services
  • Valuation and fairness opinions
  • Legal process outsourcing
  • Patent research services
  • Business operations support, analytics & management
  • Editorial process outsourcing

Market researching

Leaders in the market research industry are slowly seeing the benefits offered by KPO and have begun outsourcing.[citation needed] Comprehensive IT solutions are offered by vendors who provide solutions covering the entire life cycle of a market research project. Smaller firms can also benefit from these solutions as they are cost effective and remain within the budget of smaller organizations.

KPO is claimed to efficiently increase productivity and increase cost savings in the area of market research.[citation needed] Advocates claim that the trend is likely to prove increasingly popular in the global market research industry.

See also


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