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Wealth creation in India by KPOs

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					   Knowledge Process outsourcing



Wealth creation in
India by KPOs
                                               Introduction
   The KPO sector                              India has been a traditional leader in global
                                                                                                that churns out a large number of qualified
                                                                                                professionals.
   has been one of the                         outsourcing of information technology (IT)
                                               services and Business Process Outsourcing        Role of ICTs in KPOs
   largest absorbers of                        (BPO) for some years now. In fact, the
                                               basic foundation of India’s strength
                                                                                                Similar to other outsourcing services, ICT
                                                                                                channels have played a critical role in the
   skilled graduates                           in the outsourcing domain has been
                                               the information and communication
                                                                                                rise and growth of the KPO industry. The
                                                                                                most prominent ICT channels utilized by
   and post-graduates                          technology (ICT) revolution witnessed by
                                               the country in the 90’s. Thomas L. Friedman
                                                                                                the KPO industry include the Internet
                                                                                                and fixed/mobile telephony. Both these
   in recent years,                            rightly argues this point in his book ‘The
                                               World is Flat’, where he reasons the massive
                                                                                                communication channels form the basis of
                                                                                                day-to-day operations in any KPO.
   and is expected to                          laying of high-speed cables and optical
                                               fibre lines in the 90s, and the consequent
                                                                                                    To elaborate further, the KPO industry
                                                                                                primarily utilizes two research techniques –
   remain so in the                            availability of low-cost telecommunication
                                               services to India. Though India was always
                                                                                                secondary and primary research. Secondary
                                                                                                research is an Internet based technique,
   coming years.                               endowed with skilled talent, as is evident
                                               by the number of Indian engineers that
                                                                                                which involves using search engines and
                                                                                                paid databases to gather information. As
                                               migrated to Western countries in the 70’s        is evident, this technique wouldn’t exist
                                               and 80’s, accessibility to this workforce        without the Internet. It is impossible to
                                               was dramatically improved by advent of           imagine antiquated research methods
                                               several ICT channels, most prominently,          such as scanning books and journals in
                                               the internet.                                    libraries in today’s scenario. The Internet
                                                                                                has facilitated access to thousands of
                                               Knowledge process                                research papers, consultancy reports etc.
                                               outsourcing (KPO)                                at the click-of-a-mouse. This has made
                                               Outsourcing in India has moved up                it possible for a company located in
                                               the value chain over the last 5-7 years          India, to have access to the same level of
                                               in terms of quality of services provided,        information which a company in the US
                                               and ventured into Knowledge Process              might probably have. Consequently, this
                                               Outsourcing (KPO). This essentially              has enabled Indian companies to carry out
                                               means delivering high-quality and ‘value-        and deliver research to companies located
                                               added’ knowledge services to clients.            outside India, without compromising on
                                               The major domains for KPO include                the quality of information.
                                               business research, investment research,              Primary research is another important
                                               market research, intellectual property, data     technique, which involves conducting
                                               analytics etc. A major differentiating factor    telephonic interviews, and electronic or
                                               between a BPO and a KPO is the skill set         email based surveys. This is most often
                                               of employees. A KPO, in general, requires        used to fill information gaps left even after
                                               qualified professionals from different fields.   performing secondary research. Of course,
   Soumitra Sharma                             This includes engineers, MBAs, doctors,          in areas like market research, it becomes
    Business Analyst, Evalueserve, India       statisticians, and chemists etc. This is even    the only tool to interact with consumers
   soumitra.sharma@evalueserve.com             more suited to the Indian scenario, due          and analyse their opinions. As is evident
                                               to the rigorous Indian education system          from the description, this technique is
July 2007 | Vol. V No. 7 | www.i4donline.net
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predominantly based on fixed or mobile telephony, and
the Internet. It is only these ICT channels that have
enabled, say an analyst based in India, to communicate
with the CEO of a company in the US. Advanced
communication channels have left the concept of
‘distance’, meaningless in this context. In addition, many
KPOs are also using advanced telephony services such
as IP telephony, to further refine their communication
mediums.
    Another important aspect of the KPO industry,
where ICT has played an important role, is client
communication. It is imperative that there be an open
communication channel between the client and the
service provider. ICT channels, such as telephone and
email based communication, have provided a convenient
communication medium between clients and service
providers. This has given added confidence to offshore clients, in      ICT enabled Wealth Creation by KPOs
terms of having a good understanding with the service vendor and        The size of the Indian KPO sector is expected to reach close to
ensuring that their requirements are met by the service provider.       US $ 12 billion by 2010. The Indian KPO industry employed
On the other hand, it has benefited Indian KPOs by ensuring             close to 75,000 people in 2006. This is expected to reach close to
prompt consultation and feedback with the client. Therefore,            250,000-280,000 by 2010. The sector has been one of the largest
ICT channels have ensured that the KPO industry acquires                absorbers of skilled graduates and post-graduates in recent years,
international credibility.                                              and is expected to remain so in the coming years. The starting
    A sub-set of the above issue is the medium of sending the           salaries in this sector are one of the best by any standards, with
research deliverable to the client. Email based communication           graduate engineers and fresh MBAs commanding between 3-4
has left traditional methods such as physical mailing redundant         lakhs per annum. The Indian KPO industry is expected to serve
in the KPO industry. An important aspect of ensuring client             close to 5,000 global companies by 2010.
satisfaction is that the results of the research and analysis are           While the per hour billing rate for BPO operations is about
delivered to the client on-time, and in a user-friendly format. The     USD 8-11, it typically hovers around USD 22 for a KPO, with
KPO industry utilizes tools such as MS-Excel and PowerPoint to          certain high-end projects getting billed at even higher rates of close
make the deliverable user-friendly. Email communication further         to USD 30-40 per hour. On the other hand, capital investment
ensures that the deliverable reaches the client without any delay,      per seat is similar in both cases. This ultimately translates to higher
and provides instant access to the results of the study. Another        revenues for the company. Therefore, the IT enabled Indian KPO
emerging trend in KPOs is the creation of an FTP link on the            industry is generating both employment and wealth.
internal server, which can be accessed by the client as a web link
through the Internet. This, in fact, solves the problem of email        ICT related Challenges in the KPO Industry
congestion on servers. It would not be wrong to say that, without       Though ICT has played a stellar role in the KPO sector, certain
the above mentioned advanced communications channels, the               issues still remain to be resolved. Convenient ICT channels such
KPO industry would have been nipped in the bud.                         as Internet have also led to data security issues. There is a real
    Advanced ICT channels have also facilitated the concept of          risk of client deliverables and other client-specific information
‘Offshore Research Centres (ORCs)’. This essentially implies a          getting leaked out through email. There have also been instances of
dedicated team of analysts working full-time for a particular client.   breach in client confidentiality. Another challenge is unreliability
ICT channels, such as email, ensure a constant interface between        of certain data/information sources on the Internet. Extensive use
the team and the client. This results in a working environment          of Internet research has also been seen to promote plagiarism in
very similar to a conventional situation, where both stakeholders       certain instances.
work together at the same location.                                         Therefore, the KPO industry will have to take necessary steps
    In addition, ICT has enabled quick invoicing and financial          to maintain client confidence with respect to data privacy ad
dealings through secure Internet transactions. This has left            confidentiality issues. This will ensure that ICT continues to play
foreign bank transfers, which lasted a few days, redundant.             a constructive role in the KPO industry.
Another important value-proposition of the Internet has been
convenient access and tracking of Request for Proposals (RFPs).         Conclusion
The traditional methods of referring to advertisements etc. are         ICT has played a crucial role in the birth and development of the
time-consuming. However, websites such as dgmarkets and                 KPO industry in India. The sector continues to generate both
devbusiness, have enabled KPOs to conveniently track new RFPs           wealth and employment, and has bright future prospects, provided
that are uploaded from time to time. This further provides a            companies are able to resolve ICT related challenges such as data
continuous stream of business to the KPO industry.                      protection and privacy, client confidentiality and plagiarism.


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