After the rapid growth of business process outsourcing (BPO), companies are now considering knowledge process outsourcing (KPO). The next step in the evolution of process outsourcing, KPO can be defined as a high added value process chain that focuses on the attainment of objectives with the use of skills and knowledge of a higher level. It is simply moving away from the typical execution of standardized processes to the implementation of processes that demands advanced knowledge and expertise, as well as decision-making.
The boom on the KPO industry began during the 1990s, but it was until 2003 when the industry began to grow. In 2006, a full-grown industry began to emerge with the growing awareness among companies and clients. Leading players of KPO are India, China, and the Philippines, which produce a huge turnover of highly educated professionals every year. The major lifeblood of this industry is huge knowledge banks and enough professionals in various fields that have high analytical, theoretical, and conceptual skills needed in fulfilling knowledge process activities required by the market.
Basically, knowledge process outsourcing is the matured version of business process outsourcing. Unlike BPO, which focuses its manpower on process expertise, KPO provides knowledge expertise. Business entities in KPO provide advanced analytical skills and business expertise rather than plain process proficiency. They provide in-depth analysis in complex areas such as legal services and business and marketing researches. The strength of a KPO is gained from highly educated professionals with expertise in different fields. The scope where KPO may be applied is not only limited to Information Technology (IT), but s also applicable in different sectors such as legal processes and research, engineering services, market research (market research KPO), web development applications, computer aided design/computer aided manufacturing (CAD/CAM) applications, business research and analytics, and many others. The non-core activities from these sectors are outsourced to KPO companies where highly educated individuals work on the KPO tasks.
The growth of KPO industries can be attributed to the increasing shortage of highly trained and skilled professionals in various fields such as financial management and engineering design. Manpower needed in these fields can now be easily obtained at a lower cost without sacrificing the quality of the output. Also, the company is assured that high-end services are done efficiently by qualified and trained individuals.
One advantage of KPO is the availability of well trained and highly educated manpower that is capable of performing KPO based activities. This ensures that the services provided by these intellectual and knowledgeable people are of superior quality. Aside from the high performance and efficiency being obtained from KPO companies, the skills and manpower provided by these companies are obtained at a lower cost. Benefits that are gained from outsourcing are:
- Reduction of incurred cost
- Increased profit
- Companies can focus on their key competencies while outsourcing non-core business activities
- Same jobs can be done with similar precision and quality at a lower cost
- Work is done by highly skilled and trained manpower