Knowledge process outsourcing
Encyclopedia
Knowledge process outsourcing (KPO) is a form of outsourcing
, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans.
/ ITO
outsourcing, which tends to focus on rules-based processing. KPO typically requires people with higher education, specific skills, and specialized business experience. As the work entails decision-making, offshore teams would need to be more closely integrated with the onshore teams that they support than would be the case in a typical outsourcing engagement.
Process transparency is a major barrier to using KPO services. Many organizations do not track carefully which decisions are made by whom, and rely so much on informal social processes (and "soft skills") that it is unclear how much the use of KPO would disrupt existing operations. However, requirements like Sarbanes-Oxley and radical transparency
movements like full cost accounting
, shareholder activism and eco-labels and moral purchasing require organizations to be more explicit about when and by whom decisions are made. These trends make it easier for outsourcing non-critical jobs to be considered by qualifying the impact of decisions in advance. Furthermore, it becomes easier to evaluate and compare success. A fully developed service economy
enables KPO by treating all functions as services. So do more technical trends such as service oriented architecture, enterprise application integration
and telework: it is easier to outsource a job if it is already being performed outside the head office. Organizations adopting ISO 9000
and ISO 19011
should also find it much easier to integrate externally provided KPO into their operations and audit them on a fair basis.
As of 2007, most US organizations were hiring foreign professionals under H-1 visas to do jobs in the USA for several years, after which they would return to their home countries as managers to train and supervise others, continuing to report to their former business units.
The following extract from chapter two of the British Computer Society book 'Global Services: Moving to a Level Playing Field' by Mark Kobayashi-Hillary
and
Dr Richard Sykes attempts to define KPO:
"KPO is merely a continuation of BPO, though with rather more business complexity. The defining difference is that KPO is usually focused on knowledge-intensive business processes that require significant domain expertise (application professionalism in the language of Chapter 1). The offshore team servicing a KPO contract cannot be easily hired overnight as they will be highly educated and trained, and trusted to take decisions on behalf of the client.
IT outsourcing is strongly focused around technical professionalism, and the migration to business process outsourcing introduces this extra dimension of application professionalism. Ever more complex services, as implied by KPO, demonstrate this very well. The profile of people being hired to serve within KPO service companies are more diverse than just being drawn from technical IT services – these are people with MBAs, and medical, engineering, design or other specialist business skills. KPO delivers higher value to organizations that offshore their domain-based processes, thereby enhancing the traditional cost– quality paradigm of BPO. The central theme of KPO is to create value for the client by providing business expertise rather than process expertise. So KPO involves a shift from standardized processes to advanced analytical thinking, technical skills and decisive judgement based on experience."
KPO is claimed to efficiently increase productivity and increase cost savings in the area of market research. Advocates claim that the trend is likely to prove increasingly popular in the global market research industry.
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans.
Overview
Knowledge process outsourcing (KPO) is the term used to describe outsourced support that requires deep domain knowledge and the exercise of judgment and interpretation. It differs from traditional BPOBusiness process outsourcing
Business process outsourcing is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business functions to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca Cola that outsourced large segments...
/ ITO
Information Technology Outsourcing
Information technology outsourcing or ITO is a company's outsourcing of computer or Internet related work, such as programming, to other companies...
outsourcing, which tends to focus on rules-based processing. KPO typically requires people with higher education, specific skills, and specialized business experience. As the work entails decision-making, offshore teams would need to be more closely integrated with the onshore teams that they support than would be the case in a typical outsourcing engagement.
Process transparency is a major barrier to using KPO services. Many organizations do not track carefully which decisions are made by whom, and rely so much on informal social processes (and "soft skills") that it is unclear how much the use of KPO would disrupt existing operations. However, requirements like Sarbanes-Oxley and radical transparency
Radical transparency
Radical transparency is a management approach in which all decision making is carried out publicly. The term was used by Daniel Goleman in his book...
movements like full cost accounting
Full cost accounting
Full cost accounting generally refers to the process of collecting and presenting information - about environmental, social, and economic costs and benefits/advantages - for each proposed alternative when a decision is necessary. It is a conventional method of cost accounting that traces direct...
, shareholder activism and eco-labels and moral purchasing require organizations to be more explicit about when and by whom decisions are made. These trends make it easier for outsourcing non-critical jobs to be considered by qualifying the impact of decisions in advance. Furthermore, it becomes easier to evaluate and compare success. A fully developed service economy
Service economy
Service economy can refer to one or both of two recent economic developments. One is the increased importance of the service sector in industrialized economies. Services account for a higher percentage of US GDP than 20 years ago...
enables KPO by treating all functions as services. So do more technical trends such as service oriented architecture, enterprise application integration
Enterprise application integration
Enterprise Application Integration is defined as the use of software and computer systems architectural principles to integrate a set of enterprise computer applications.- Overview :...
and telework: it is easier to outsource a job if it is already being performed outside the head office. Organizations adopting ISO 9000
ISO 9000
The ISO 9000 family of standards relates to quality management systems and is designed to help organizations ensure they meet the needs of customers and other stakeholders . The standards are published by ISO, the International Organization for Standardization, and available through National...
and ISO 19011
ISO 19011
ISO 19011 is an international standard that sets forth guidelines for:*quality management systems auditing*environmental management systems auditingIt is developed by the International Organization for Standardization....
should also find it much easier to integrate externally provided KPO into their operations and audit them on a fair basis.
As of 2007, most US organizations were hiring foreign professionals under H-1 visas to do jobs in the USA for several years, after which they would return to their home countries as managers to train and supervise others, continuing to report to their former business units.
The following extract from chapter two of the British Computer Society book 'Global Services: Moving to a Level Playing Field' by Mark Kobayashi-Hillary
Mark Kobayashi-Hillary
Mark Kobayashi-Hillary is a British journalist, blogger, and editor based in São Paulo, Brazil - he is the chief executive officer of research company IT Decisions...
and
Dr Richard Sykes attempts to define KPO:
"KPO is merely a continuation of BPO, though with rather more business complexity. The defining difference is that KPO is usually focused on knowledge-intensive business processes that require significant domain expertise (application professionalism in the language of Chapter 1). The offshore team servicing a KPO contract cannot be easily hired overnight as they will be highly educated and trained, and trusted to take decisions on behalf of the client.
IT outsourcing is strongly focused around technical professionalism, and the migration to business process outsourcing introduces this extra dimension of application professionalism. Ever more complex services, as implied by KPO, demonstrate this very well. The profile of people being hired to serve within KPO service companies are more diverse than just being drawn from technical IT services – these are people with MBAs, and medical, engineering, design or other specialist business skills. KPO delivers higher value to organizations that offshore their domain-based processes, thereby enhancing the traditional cost– quality paradigm of BPO. The central theme of KPO is to create value for the client by providing business expertise rather than process expertise. So KPO involves a shift from standardized processes to advanced analytical thinking, technical skills and decisive judgement based on experience."
Types of KPO services
KPO services include the following:- Investment research services (equity, fixed income and credit, and quantitative research)
- Business research services
- Data Analytics
- Market researchMarket researchMarket research is any organized effort to gather information about markets or customers. It is a very important component of business strategy...
services - Valuation and fairness opinions
- Legal process outsourcing
- Patent research services
- Business operations support, analytics & management
- Editorial process outsourcingEditorial process outsourcingEditorial process outsourcing is a form of knowledge process outsourcing, which itself is a form of outsourcing.On the corporate side, editorial process outsourcing deals with outsourcing of press releases, writing, editing, and designing newsletters....
Market researching
Leaders in the market research industry are slowly seeing the benefits offered by KPO and have begun outsourcing. Comprehensive IT solutions are offered by vendors who provide solutions covering the entire life cycle of a market research project. Smaller firms can also benefit from these solutions as they are cost effective and remain within the budget of smaller organizations.KPO is claimed to efficiently increase productivity and increase cost savings in the area of market research. Advocates claim that the trend is likely to prove increasingly popular in the global market research industry.
See also
- Knowledge economyKnowledge economyThe knowledge economy is a term that refers either to an economy of knowledge focused on the production and management of knowledge in the frame of economic constraints, or to a knowledge-based economy. In the second meaning, more frequently used, it refers to the use of knowledge technologies to...
- OffshoringOffshoringOffshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ offshoring...
- Instructional capitalInstructional capitalInstructional capital is a term used in educational administration after the 1960s, to reflect capital resulting from investment in producing learning materials....
- Offshoring Research NetworkOffshoring Research NetworkThe Offshoring Research Network is an international network of researchers and practitioners studying organizations in their transition to globalizing their business functions, processes and administrative services...
- Business process outsourcingBusiness process outsourcingBusiness process outsourcing is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business functions to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca Cola that outsourced large segments...