KPO Resource Center
KPO Philippines
The Philippines have been a Business Process Outsourcing destination for many companies over the past few years and in recent years, the KPO Philippines industry is also growing and looking to be a promising new business niche. KPO (Knowledge Process Outsourcing) is generally known as the more specialized and complex brother of BPO. KPO is basically an industry that caters to the demand for offshore professionals like doctors, lawyers, IT professionals, and writers, among others.
Companies choose to tap into KPO companies mainly to lower operating costs and so look to outsource in developing countries India, the Philippines, China, Pakistan, and other Asian countries. In utilizing an offshore solution, companies can save on expenses like finding new employees and recruitment in general, training, human resource management, infrastructure, and equipment. Companies can also save on energy and salary costs. Investing in a KPO Philippines or India-based company can greatly increase a company’s profit margins while still maintain a high quality of service.
There are advantages and disadvantages to taking up KPO companies based in different countries. As mentioned, there are several key offshore locations around the world that cater to specific niches. For example, several countries can provide low cost IT professionals. KPO Philippines, China, Ireland and India-based companies have different salary ranges for their IT services. While Ireland can offer the highest English proficiency and present the best near-shore location, the relatively high salary bracket for the country’s IT professionals (around USD 25,000 to 35,000 per year) can be a bit expensive for companies looking to cut costs. China, on the other hand, can give 24/7 support and low cost manpower but a low proficiency in English and differences with Western cultures are downsides to an otherwise extremely favorable location. The leader in the offshore IT KPO industry is India, which produces a large pool of English-proficient IT graduates a year; India built infrastructure and created Software Technology Parks to more effectively cater to their clients.
Companies in the KPO Philippines industry can tap into a large pool; the country produces a huge number of IT graduates (more than 300,000) every year, most of them proficient in English. The Philippines is culturally compatible with the West, as well as has Special Economic Zones (SEZs) for companies, though the country also has a lack for IT training in general. Countries that wish to be competitive in the KPO and BPO industries will need to concentrate on training to supply the demand for highly skilled and experienced manpower. Governments will need to offer friendly policies and export tax exemptions as well to draw in more clients. Companies looking to outsource also look into other important factors when choosing the country from which to outsource their manpower, including political stability and infrastructure, among other things.
Choosing to get services from a KPO Philippines, India, or China-based company depends mainly on a company’s needs and preferences. At any rate, choosing to capitalize on a KPO service provider can both save money and provide a large talent pool for companies looking to expand their business.
KPO India
As one of the leading offshore destinations in the knowledge process outsourcing (KPO) industry, India certainly has much to look forward to in the future. Several organizations and companies have released studies predicting the likely path the KPO India based companies will take, the market share the country will enjoy, and the possible areas for improvement, among other things.
The National Association of Software and Services Companies (NASSCOM), an organization that represents the Indian software industry, released a report indicating that the KPO industry will reach around USD 17 billion this year, KPO India based companies enjoying more than 70 percent of the global market share. The report also indicated that the other countries expected to join the KPO industry includes China, Russia, Ireland, Israel, and the Czech Republic. Also, NASSCOM predicted that most business process outsourcing will become knowledge-based, a significant shift from process oriented to knowledge and expertise oriented business processes.
Evalueserve, a knowledge process outsourcing company, conducted a study predicting that the global KPO industry will grow from USD 1.2 billion in 2003 to USD 17 billion this year while the low-end outsourcing services market is expected to grow from USD 7.7 billion to USD 39.8 billion. KPO India based companies were lauded in the same study as the ones that provide high quality manpower at the most cost effective prices. The Evalueserve white paper also noted the difference between the salary ranges of those in the BPO industry and KPO service providers. Evalueserve foresees a boom in the KPO industry brought about by a lack of specialized manpower in developed countries – the kind of specialized talent they can get offshore at lower costs.
Outsource2India, a Bangalore-based outsourcing company, reports that recently the process outsourcing industry has been focusing more on getting skilled professionals like doctors, engineers, accountants, and architects into talent pools. According to the report, the BPO industry has evolved from data entry and call center jobs to more specialized areas that require skills, expertise, and experience. KPO Indian based firms can capitalize on knowledge based projects like intellectual property research which is rather expensive in the United States. According to the study, outsourcing a portion of the patent drafting and filing process can save a lot of money for companies who rely heavily on innovation and new inventions.
Outsource2India also indicated that KPO India based companies can profit from the amount of outsourced research and development, especially in pharmaceuticals and biotechnology. KPOs can also take advantage of the demand for skilled workers in other industries.
At any rate, it’s a win-win situation for both the KPO India based firms and companies looking to outsource some of their knowledge based processes. The KPO service provider generates income while the company can get quality service at a fraction of the price they would pay for in-house talent. Considering the enormous potential for growth and expansion, KPO India based companies will need to broaden their talent pools and maintain the high quality of service they already provide.
Knowledge Process Outsourcing: BPO’s smarter big brother
Those who hear KPO for the first time may think that it’s just a typo of the otherwise well-known BPO industry, but Knowledge Process Outsourcing is actually an emerging new industry in its own right. KPO is more than just a letter away from BPO (Business Process Outsourcing); KPO offers specialized services that call for a highly trained and experienced workforce.
BPO companies take pride in process expertise and their ability to efficiently process large volumes while maintaining standards of quality. In knowledge process outsourcing, the goal is more focused on the quality of service and the workforce’s knowledge and expertise. KPO companies usually take care of business processes that require highly skilled workers and professionals from different fields; domain expertise and high-end qualifications are required to fill such positions.
Doctors, lawyers, writers, IT professionals, and accountants, among other professionals are employed by knowledge process outsourcing companies since the tasks delegated to these high-level offshore staff include jobs that require analytical and technical knowledge like patent filing and research, insurance claims processing, and investment valuation and research, among others. KPO jobs may require some decision-making as well. It can be said that KPO jobs involve more core processes compared to BPOs since those only take care of non-core processes.
Basically, BPO involves following a predefined set of processes while KPO handles knowledge intensive processes that require expertise and experience to deliver high quality service.
The knowledge process outsourcing industry is growing in different countries, including India, China, the Philippines, Canada, Russia, and Israel. The mentioned major KPO service providers each have their own strengths and weaknesses, as well as specialties. India for example specializes in IT services; the country turns out several IT professionals in a year, while also providing and improving the infrastructure and telecommunication equipment needed. KPO service providers cater to different companies from different industries, including market research firms, business consulting companies, financial institutions like banks and investment companies, legal firms, animation studios and many others.
Developing countries can benefit from knowledge process outsourcing since it isn’t just another source of revenue like BPOs: being a leader in KPO service providers can increase the value of a country’s manpower.
Projects given to knowledge process outsourcing companies can be as big or as small as the client requires (as opposed to the BPO’s usually massive workloads) so even small and medium-sized companies can afford to outsource some of their processes. Companies looking to cut down can choose to get offshore accountants or lawyers to support or replace finance or legal departments. Companies can dip into a KPO service provider’s talent pool and get great cost savings from the difference in salary ranges in different countries.
Salaries in knowledge process outsourcing companies tend to be higher than those offered in BPOs; also, employee recruitment in a KPO is stricter in terms of qualifications and skill set requirements.
Arguably, the knowledge process outsourcing industry is more like a higher end type of BPO though some industry experts agree that KPOs are the expected improved versions of BPOs.
KPO
KPO, or Knowledge Process Outsourcing, is a kind of outsourcing that involves employing highly skilled and educated employees for specialized knowledge and information-related work. The employees can be from a company’s subsidiary or a different company offshore or in the same country. Offshore KPO is particularly useful for most companies as it saves operational costs, employee recruitment, and supervision.
KPO differs from BPO (Business Process Outsourcing) in the sense that KPO is more specialized and arguably more complex. While outsourcing companies often focus on quantity, efficiency, and volume of work, KPO aims to provide high quality output with experienced and expert skilled workers. As the nature of KPOs’ work demands first-rate performance, recruitment and screening for employees is stricter and centers more on an applicant’s skill set, expertise, and experience.
There are several types of KPO services, mostly related to research and content. Knowledge-related services include accounting and bookkeeping, business consultation, creative writing, web content and design, intellectual property research, and legal process services, among others. As more industries open their doors to the idea of outsourcing some of their knowledge processes, companies that specialize in KPO then expand their employee pools to cater to their clients and to attract potential clients.
KPO business entities thrive in countries like India, the Philippines and China as those countries have a good number of skilled workers and professionals from different fields.
Benefits of KPO
Getting skilled, trained and experienced manpower can not only be expensive but also tedious for some companies. Working in partnership with a KPO company can dramatically reduce costs in training, technology, operations, and even recruitment as most KPOs handle those functions for their clients. Companies can track their outsourced manpower as closely as they need and ensure that quality is up to par with industry standards. Also, companies can expand or downsize their outsourced manpower with little trouble.
Outsourcing what normally would be in house services can increase profits by reducing costs, and save a company the management energy needed to support a larger workforce. Companies can expect products that are on time, of good quality, and relatively cheap. KPO service providers can easily adapt to changes in policy or quality demands, as well as provide uninterrupted service and adaptable schedules depending on the client’s needs.
Getting offshore outsourced accounting services, for example, can enable a company to downsize their accounting departments or do away with the entire department completely while still be assured of output quality and experience of the workforce. The KPO provider will be responsible for their teams’ training, recruitment and labor management costs so the company doesn’t have to deal with those costs.
Healthcare professionals and hospitals on the other hand can capitalize on medical transcription services. KPO companies that specialize in this type of business process hire professionals with medical backgrounds as well as train their employees in hearing different accents, medical terms, specialties, and other things to ensure the utmost quality and efficiency.
On the whole, KPO provides a great opportunity for companies to expand operations and cut operational costs while still maintain high quality output.
KPO companies
In the past few years, Business Process Outsourcing (BPO) companies have contributed to the Philippines’ economic growth, and in more recent years, Knowledge Process Outsourcing has come to the country as well. Several KPO companies have cropped up or have taken up offices in the Philippines, but first things first. What is the difference between BPO and KPO?
BPO vs. KPO
First off, KPO companies require skilled and experienced employees since the services they provide are much more complex than the relatively average work taken up by BPO companies. Where BPOs focus more on the volume and quantity of their production, KPO companies are geared toward producing high quality services and products. Also, companies would source their non-core processes to a BPO while KPO professionals tend to be given close to core duties that may come with some decision-making responsibilities as well.
Depending on the clients they serve, KPO companies may employ a wide range of professionals like engineers, doctors, writers, market analysts, and even animators to answer their clients’ needs. As a result of this higher skill requirement, KPO companies offer higher salaries compared to BPO companies.
Both BPO and KPO companies offer the same cost effective manpower solution to their clients; offshore operations are mostly cheaper since outsourcing capitalizes on the fact that some countries have a lower cost of living. Also, both outsourcing solutions offer clients a chance to expand their operations at lower costs and with little to no snags in terms of recruiting, screening, training, and managing manpower. Taking away the HR responsibilities and general workforce management also lowers cost for the client. Human resource management, training, equipment, and the manpower are usually shouldered by the BPO and KPO companies, charging their clients a flat rate for services rendered.
A BPO’s strength usually lies in the efficiency and its ability to clear out vast volumes of business processes while a KPO banks on its specialties, quality of service, and the level of expertise of its skilled workers. Some qualify accounting and bookkeeping, customer management, medical and legal transcription, and payroll processing as processes delegated to BPO companies while web content development, research and development, financial consulting, patent research and IP asset management, and animation are mostly entrusted to KPO companies.
KPO Destinations
Many US companies outsource greatly to counter rising energy costs, economic instability, and lower profit margins; the common destinations of companies looking to outsource are developing countries like India, the Philippines, China and other Asian countries like Pakistan. KPO companies can take advantage of each country having developed their own specialties. India, for example, produces several thousand IT graduates every year and continually develops their IT and telecom infrastructures to ensure reliability.
Other countries with potential to provide KPO companies with a good number of skilled workers are Russia and Canada. Russia has a lot of scientists and engineers though most of them don’t speak English. Canada, on the other hand, is politically stable, has good telecommunications infrastructures in place, and is ideal for software development KPO companies, though Canada has the highest IT salary out of the other countries that offer offshore services.
