Kpo Industry
Proposed KPO (Financial Services) Strategy for Large Indian Outsourcing Firms
Thara K.1 , Krishnankutty K.V.2 Department of Business Administration, College of Engineering, Trivandrum - 695 016
1- MBA student, 2-Proffessor
Abstract – At a time when BPO (Business Process Outsourcing) is becoming old news, Knowledge Process Outsourcing or KPO is now the shiny new business tool in the box. The reward of successfully implemented KPO is truly enormous. India, the global KPO “hotspot” and is expected to capture over 70 percent of the market share going forward. The paper aims at developing and formulating a strategy for large Indian multi-national firms to foray into the KPO (Financial Services) space. It sets out with Porter’s five forces analysis of the KPO industry and extends to the proposed services offerings in financial services sector, the intricacies regarding the workforce required to carry out knowledge process, the prospective client base, efficient operational control and so on. The strategy aims to address the challenges faced by KPO vendors contemporarily by taking into view the inherent discrepancies in the KPO industry . Towards the end, the strategy highlights the competitive advantage of the firm and value proposition offered to its clients. Keywords: KPO, Service level Agreement (SLA), Porter‟s five-forces model, Full Time Equivalent (FTE), talent retention, operational efficiency, competitive advantage. Introduction Having made an indelible mark in the global BPO business, Indian Information Technology (IT) and IT Enabled Services (ITES) sector is now thriving
in KPO. KPO is about getting high-end, valueadded work done by resources whose co-location with the end client is not necessary, where the effort is people-intensive, and the end product is arrived at through rigorous methodologies. It involves the offshore outsourcing of knowledgedriven or “high end” processes that require specialized domain expertise, such as R&D, insurance financial
Thara K.1 , Krishnankutty K.V.2 Department of Business Administration, College of Engineering, Trivandrum - 695 016
1- MBA student, 2-Proffessor
Abstract – At a time when BPO (Business Process Outsourcing) is becoming old news, Knowledge Process Outsourcing or KPO is now the shiny new business tool in the box. The reward of successfully implemented KPO is truly enormous. India, the global KPO “hotspot” and is expected to capture over 70 percent of the market share going forward. The paper aims at developing and formulating a strategy for large Indian multi-national firms to foray into the KPO (Financial Services) space. It sets out with Porter’s five forces analysis of the KPO industry and extends to the proposed services offerings in financial services sector, the intricacies regarding the workforce required to carry out knowledge process, the prospective client base, efficient operational control and so on. The strategy aims to address the challenges faced by KPO vendors contemporarily by taking into view the inherent discrepancies in the KPO industry . Towards the end, the strategy highlights the competitive advantage of the firm and value proposition offered to its clients. Keywords: KPO, Service level Agreement (SLA), Porter‟s five-forces model, Full Time Equivalent (FTE), talent retention, operational efficiency, competitive advantage. Introduction Having made an indelible mark in the global BPO business, Indian Information Technology (IT) and IT Enabled Services (ITES) sector is now thriving
in KPO. KPO is about getting high-end, valueadded work done by resources whose co-location with the end client is not necessary, where the effort is people-intensive, and the end product is arrived at through rigorous methodologies. It involves the offshore outsourcing of knowledgedriven or “high end” processes that require specialized domain expertise, such as R&D, insurance financial
References: 1. Aggrawal A and Pandey A, The Next Big Opportunity – Moving up the Value Chain from BPO to KPO, Evalueserve report, 2004 2. Ashank D and Joydeep DG, The Evolution of KPO 3. in India, PricewaterhouseCoopers Report, 2005 Baldia S, Thinking Outside the BPO: Knowledge Process Outsourcing to India, Mayer, Brown, Rowe & Maw LLP, 2008 4. 5. 6. 7. 8. 9. Baker & McKenzie report, Global Outsourcing, Sept 2004 Evalueserve report, Destination India: Value Proposition in R&D Outsourcing, 2004 Evalueserve report, Growth of Indian KPO sector, 2004 Evalueserve report, Knowledge Process Outsourcing – Market & opportunities, 2007 IBM Global Services, Business impact of outsourcing—a fact-based analysis, 2006 Kelly Services White Paper, Knowledge Process Outsourcing (KPO) — An Emerging Opportunity, July 2006. 10. KPMG report, Financial Services KPO to be worth US$5 bn by 2010, 2008 11. PricewaterhouseCoopers report, Global intergration through KPO, 2005 12. Schaaf J, Outsourcing to India: Crouching tiger set to pounce, Deutsche Bank report, Oct 2005 13. Umasekaran, Research Methods for Business , Wiley India, IV edition, 2009. Conclusion The strategy was formulated for large Indian outsourcing firms to foray into the high-potential KPO (Financial Services) industry, having established their BPO operations world-wide. Porter‟s five forces analysis was carried out which assessed the impact of rivals, suppliers, buyers, prospective entrants and substitutes in the industry. The strategy had provisions to address the challenges currently confronted by the KPO vendors. A description on the offerings in financial 8 14. Venkateswaran J, The current state of Knowledge Process Outsourcing, WNS Global Services report, 2009 15. Zinnov LLC, Banking services offshoring, Apr 2007 9