Knowledge Process Outsourcing - Definition
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What is Knowledge Process Outsourcing (KPO)?
Knowledge process outsourcing (KPO) is a type of outsourcing in which a different company or subsidiary in the same organization (which may be based offshore to save on taxes or other resources) conducts knowledge and information-related work in order to save costs and resources. In general, it involves high-value work such as research, development, analysis, and advisory services by highly qualified staff of an organization. KPO companies can also make business decisions on behalf of the source company. The organization employing KPO minimizes cost since it is not required to establish any infrastructure or be responsible for any operating or running costs.
Types of KPO Services
KPO services include accounts, tax returns, computer simulation support, design and development research, financial services, etc; but are categorized into four main types. They include:
- Data Analytics and Insights: Fixing client problems in all sectors and fields to empower businesses through cutting-edge data analysis with real insights.
- Market Research / Business Research: Delivering factual, concise responses to the pressing market questions by delivering analytical services and strategic advice.
- Global Reporting and Performance Management: To achieve operational excellence and efficiency by providing effective monitoring and performance assessment across industries.
- Data Management: Efficient data integration, storage, collection, and shared solutions, as needed by various stakeholders, for comprehensive business reporting and analysis.
Advantages and Disadvantages of Knowledge Process Outsourcing
The advantages of KPO include:
- Cost-Effectiveness: The cost advantage is certainly one of the biggest benefits of KPO. The organization is not required to establish any infrastructure or be responsible for any operating or running costs. It also gets the skilled expertise at a reduced cost.
- Access to the brightest talent: KPO gives the business the brightest, most skilled and knowledgeable practitioners in the global pool of talent. The presence of such a talent in a developing country is also a huge cost minimization advantage.
- Focus: Externalizing certain operations, the organization will focus on its core functions.
- Improved resource utilization: An organization can make better use of the resources that they save when it outsources the non-core business planning process.
- There can be a loss of Security-Classified company information: When an organization practices knowledge process outsourcing, it can result in the loss of private information to a one time contract KPO.
- The skilled worker's behavior and quality of his work can not be guaranteed: The skilled worker is not checked thoroughly like a regular employee. This leaves room for possible bad characters which might be detrimental to the success of getting the task completed. There is also no assurance that the work will be done in the way the organization wants.
- KPO needs time and can't easily resolve the company's instant quest for success.
- Encountering legal, language and cultural barriers can complicate communication between partners.
- Shortage of the organization's skilled workers.