Knowledge process outsourcing

Abstract

In this heavily wired and globalize world of today services need not co-exist in the same geography. No wonder that out of the 525 services job categories tracked by the U.S. Department of Labor, 275 jobs have the potential for distributed execution.2 Obviously, there would be some basic factors like quality, time, expertise, cost, flexibility etc. which need to be taken into consideration before taking a decision to outsource from the geography. Throughout industrial history, outsourcing has been prevalent. Fist sector to be outsourced as a whole was the Manufacturing sector. Due to presence of cheaper raw materials and labor in the developing countries, manufacturing could be outsourced to them when process information transfer became a competitive reality. The next step in outsourcing was the business process outsourcing wherein whole sections of ones business could be outsourced to the third party. Many of the non-core business processes were then spun off to give rise to BPOs like call centers, recruitment offices, Banking Transactions etc. The whole back office was then moved to locations where cost advantages and quality could be reaped. Today information is one of the most assets of any organization. When such high value organizational intelligence is hived off to a third party, it is known as Knowledge process outsourcing (KPO). Here the outsourced functions are so vital to the organization that it is not that the KPOs are servicing the organization which outsources such work but more like their partner. Such outsourced portions of the business that are more knowledge intensive and require extensive domain expertise apart from low cost advantages add greater value to an organization. In today’s competitive and global business with reduced cycle times and greater emphasis on quality and customization from clients, the commoditized BPO model fails to deliver. This is where KPOs come in. A simple value chain in today’s information age is presented overleaf to illustrate the relevance of KPOs in today’s polycentric businesses.