BPO: Paving The Way To KPO

If business process outsourcing is processes involving templates and standard operating procedures, knowledge process outsourcing is that form of outsourcing that is judgment- and decisions-based. BPO is to claims processing as KPO is to valuation modelling.

To put it bluntly, BPO’s main goal is to take over a client company’s non-core “mundane tasks” so that the said company can concentrate on their core competencies. These tasks include call centers, data processing, email support and technical support services mainly based on information technology. BPO involves creating a long-term relationship where the BPO provider becomes an integral part, a back office, of that company.

Knowledge Process Outsourcing, or KPO, takes on tasks that require in depth analysis and expertise. These tasks include legal services, engineering and design, web content and research, precision marketing, analytics and even clinical research– in short, the core. KPO also generally involves shorter-term contracts that demand higher end skills from KPO providers. KPO is expected to be on the rise and estimated to be a $10- 17 billion global industry by 2010.

The link that connects BPO and KPO is that BPO is a foot in the door that leads to KPO, so to speak. Once a BPO destination country proves its worth through BPO, they can only move up the value chain and begin reviewing the KPO offerings that are viable for them to give. To be content with just providing BPO services is to be complacent. To remain competitive is to do more than just sustain an advantage. In the case of the Philippines, its advantage has always been in customer service because of its strong command of the English language. But competition is quick to learn. China is now patterning their educational system after that of India and the Philippines’ by revamping it to include English instruction much earlier.

Skills of the BPO talent pool have to be continuously elevated to such a degree that the next skill set can handle KPO. This can be done by the outsourcing company through training in handling more sophisticated knowledge-based operations, or better yet, by the professionals themselves by going into graduate or advanced studies.

The Philippines for some time now has been moving from low-complexity to mid-tier services and offerings and hopefully on to the Tier 1/high complexity tasks-– exactly what KPO is about.
On an economic level, KPO will keep a country’s skilled professionals from leaving the country for greener pastures. The KPO advantage is that it assures higher-paying jobs and the creation of professionals with post graduate degrees (as opposed to vanilla commerce degrees).

The big question is, “Why would companies even want to outsource their core competencies?” It’s quite simple math. If there are locations that can provide the same high-skill services at a lower price, why not?