Advantages and Enablers of Knowledge Process Outsourcing 26 Feb 2015

Advantages and Enablers of Knowledge Process Outsourcing

Before you outsource, you should learn as much as you can about knowledge process outsourcing — usually abbreviated as “KPO.” This form of outsourcing involves a provider that can apply advanced knowledge and skills. To introduce you to this important concept, Back Office Pro presents an overview of what you need to know about KPO.

What Is Knowledge Process Outsourcing?

If you want an outsourcing organization to perform “high-level tasks” for your company, you will need to find a provider capable of knowledge process outsourcing. Examples of core processes performed by the KPO sector include the following: project management, fraud analytics, remote education, medical transcript preparation, market research, data integration, equity research, radiology, legal processes, insurance and actuarial services, animation, web development and engineering services.

The insurance, financial services and banking industries were three of the earliest adopters of knowledge process outsourcing — using KPO providers in a different geographic location to perform high-end analytical work. Their successes with this form of outsourcing have caused many other industries to emulate the KPO strategy.

How Is KPO Different From BPO?

Are you confused about KPO vs BPO? Business process outsourcing — BPO — is typically viewed as a more traditional way to outsource. The focus with BPO is on process expertise. In contrast, KPO features an emphasis on knowledge expertise.

Knowledge process outsourcing requires a team with highly specialized skills — this typically involves extensive training and advanced educational qualifications. Unlike BPO’s focus on rule-based and process-driven activities, KPO involves a solid need for judgment, interpretation and analysis. The advanced technical nature associated with knowledge process outsourcing usually involves customized tools and specialized predictive modeling.

As one example of KPO, CAD and CAM services provided to the engineering sector require an outsourcing provider to have personnel with specialized degrees and certifications in fields such as structural engineering as well as AutoCAD software experience. When companies choose to use KPO, the driving motivations usually involve four key parameters — cost savings, improved quality, operational efficiencies and speedy access to a talented workforce without hiring new employees.

Capabilities That Are Difficult to Ignore

Hiring qualified employees with high-level capabilities is becoming difficult — if not impossible — in some highly competitive fields. This stark labor-shortage reality was acknowledged in a KPO study conducted by KPMG. As noted in the study, because knowledge process outsourcing organizations can supply scarce capabilities, the potential KPO solution is indeed difficult for practical businesses to ignore.

“Access to differentiated talent” has allowed the knowledge process outsourcing industry to tap into specialized fields that were previously viewed as “off-limits” in traditional outsourcing — for example, life sciences, legal services, research and development for pharmaceutical companies and mechanical engineering with CAD/CAM expertise. The KPO need for advanced degrees has led to a special premium for qualified outsourcing companies in countries with advanced educational systems such as India.

Modern Technologies Enabling Quick Data Transfer

New telecommunications and technology developments since the 1990s have forever changed how globalized outsourcing services can be delivered to clients across the world. Video conferencing, document scanning and secure data transfer capabilities now mean that companies can reliably depend on outsourcing that involves high-level tasks such as those in knowledge process outsourcing. When using outsourcing experts such as Back Office Pro in India, clients frequently receive the “finished product” more quickly and accurately than they would by working with a company either down the street or across the hall.

Cost Savings with KPO

Most companies consider outsourcing as a viable way to reduce expenses, and KPO usually meets and exceeds this test by allowing businesses to save 50 to 60 percent on services like data analytics and inventory management. What seems to place knowledge process outsourcing in “A League of Their Own” is the ability to help client organizations increase their revenues — one of the key benefits of knowledge process outsourcing is that KPO frequently adds other value that exceeds the impressive cost-saving potential.

To KPO or Not?

For any outsourcing project, you should seek and expect increased quality in addition to saving substantial time and money. With knowledge process outsourcing, your demands for quality become an even higher priority. “Amateur” outsourcing firms will simply not do the trick — you should insist on experienced companies such as Back Office Pro.

What are your experiences and thoughts about the advantages of KPO? Please share your comments below and then forward this article to your social media friends and colleagues.

– BackOfficePro

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