Definition: Knowledge Process Outsourcing (KPO) is a business arrangement in which knowledge or information-oriented activities or services, as well as complex tasks and processes of a business, are outsourced.
The provision of service requires collection, creation, interpretation, management, and dissemination of the knowledge. Further, knowledge creation demands analysis, identification of pattern, evaluation and judgement:
- It translates roughly defined, unorganized data into insight which is organized and presentable.
- The output is standard or tailor-made.
The work is undertaken by the employees of the different organization or sometimes by the subsidiary of the same concern, which may be located in the same country or foreign country.
KPO encompasses processes which require advanced information search, analytical, interpretation and technical skills, reasoning and decision-making ability. It is at the topmost point when it comes to the intellectual value chain. And so the service is provided by the professionals or experts in the specific domain.
Types of KPO
The different types of Knowledge Process Outsourcing are discussed as under:
- Offshore KPO: In Offshore KPO, the company which provides outsourcing services, is located in a foreign country, generally a developing one, having a highly qualified workforce.
- Near-shore KPO: Near-shore KPO, as the name suggests is one in which the outsourcing organization is located in the neighboring country in which the client’s organization is located. It reduced travel time, as well as the service provider, has knowledge of the culture and political ups and downs.
- Captive KPO: Captive outsourcing is one in which an organization starts operational plants in a different country. And so the company controls the management, however, the workforce is hired from a foreign company.
- Onshore KPO: Onshore KPOs are the KPO’s located in the same country in which the client’s organization is located. It is called onshoring.
- Pure play KPO: These include specialists in the concerned field or offering a wide spectrum of knowledge-related services.
Scope of Knowledge Process Outsourcing (KPO)
KPO is the advanced version of BPO. The outsourcing of the knowledge-based work by different companies is due to the excellent results given by KPO’s. It helps the companies in getting access to the skilled and talented pool of workforce. There are a wide variety of sectors which fall under KPO umbrella, these are:
It offers services such as valuation and investment research, patent filing, R&D in pharmaceuticals, data mining, clinical research, legal and insurance claim processing, industry reports, financial modelling, competitive intelligence and so forth.
Advantages of KPO
- Cost-effective: KPO’s ensures savings in operational cost.
- Qualified human resource: To maintain quality in the activities, companies require a qualified and competent human resource, which is possible through KPO.
- Focus on core business activities: When a company outsources is peripheral or secondary services/activities, it can focus on the primary business functions and vendor organization looks after the KPO requirements.
- Service quality: KPO providers often use the state-of-the-art technology, software and infrastructure. And in this way, they maintain quality in services.
- Increase in Profits: Due to the reduction in the operational cost, it results in an increase in the overall profits.
KPO firms offer domain-based services and business expertise, instead of the regular process expertise, involving small business decisions. KPO involves high value-added processes wherein the attainment of objectives are solely based on the skills, domain knowledge and experience of the workforce.