Kpo Industry

Topics: Business process outsourcing, Outsourcing, Financial services Pages: 12 (3538 words) Published: October 5, 2012
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 underwriting and risk analysis, data mining, animation, assessment, investment graphics

research, statistical analysis, tax preparation, engineering and design, simulation, medical services, clinical trials, legal services and more. Because this type of work requires a high level of judgment, subjective analysis and interpretation, the results can vary from practitioner to practitioner. Evalueserve (EVS), a top KPO firm, reports that global KPO industry is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India. India as a major KPO player in the world has inherent advantages because of its intellectual and internet resource. The resulting economic success of the BPO industry has taken many firms to graduate to KPO business. India contemporarily harbors many KPO firms all of whom together account for nearly 70% of the total revenue from the KPO activities worldwide. India has indeed become a hub for outsourcing.

India's expected contribution to KPO industry in 2010 29% 71% Rest of… India


Financial Services Offshoring Offshoring in financial services is growing in both strategic and operational significance. In effect, KPO represents the latest step, in a continuous multi-decade process of value creating strategies, with respect to a typical financial institution‟s back and middle offices. A recent survey conducted by EVS shows that financial services constitute a larger chunk of knowledge services outsourced to India.

Porter’s five forces analysis of KPO industry in India Michael Porter provided a framework that models an industry as influenced by five forces. Each of the five forces affects the average rate of return for the firms in an industry by applying pressure on industry profitability. The analyses of the five factors give the following insights: Degree of existing rivalry: This describes the competitive rivalry or the intensity of competition among the existing firms in the industry. The big players...
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