Has Knowledge Process Outsourcing re-emerged as the future of BPO?

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When I entered the industry in 2008, working for a boutique research firm in Pune, India, the research themes floating around were about “what’s next for BPO, because this recession changes everything.”

We studied the knowledge process outsourcing (KPO) segment (“KPO” sounds so dated now!), which included service areas such as legal services, marketing, publishing and digital media management, e-learning, engineering services and market research and analytics. KPO services were perceived and categorized by the market to be different because they involve a) specialized skillsets, b) judgement based work with complex sub-processes, c) greater degree of partnership between client and service provider beyond process compliance and d) required a greater degree of specialization from the service provider in a horizontal/vertical, making them “higher value services” that came along with premium billing rates.

This definitional distinction that our research revealed between KPO services and “vanilla” BPO is worth unpacking today. Our conversations now are about enterprises operating in an As-a-Service Economy, heading towards Intelligent Operations. We’re actually seeing these traditional KPO markers becoming a core part of BPO and BPaaS service delivery.

Our Blueprint scoring methodology, based on HfS’ 8 ideals of As-a-Service has Collaborative Engagement as a key parameter for success, and we see promising examples of how a partnership-driven approach has helped set up engagements for success by focusing on business context and outcomes. 

As for judgment based work and higher value services, this is very much the future of the industry for three reasons:

  1. The robot will be taken out of the human. We will reach a point in the not-too-distant future where we can leverage talent to do meaningful, value-adding work, essentially taking the rules-driven robot out of the FTE. This is already happening in pockets as the services industry makes progress on embedding intelligent automation technologies, including robotic process automation, autonomics and cognitive platforms.
  2. Industry domain knowledge is critical. Every service provider worth its salt lives in a “verticalized” client market, and our research in core operations outsourcing often reveals how buyers hang on to providers because their delivery staff has deep domain knowledge, “know more about our industry than we do” and have the certifications for their talent to prove it.
  3. End to end service platform-based delivery demands deeper skillsets. Thirdly, service providers today (at least the preferred/strategic partners) manage a lot more parts of the services value chain than just backoffice transaction processing/call center operations. With more platform-based delivery of services that have straight-through processing and analytical insights baked-in, buyers are incentivized to carve out more end-to-end service delivery that includes both complex sub-processes and volume-driven processing.

The speed of change in today’s global environment can’t be captured any better than news coming this week of UK’s tentative departure from the EU, and speculations are flying wildly about the implications of this U.S. election year. And so here we are, as an industry, once again, wondering, what happens next, because emerging digital business models and the global environment is changing everything. 

The Bottom-line: KPO really became “As-a-Service” –  Smart talent and technology delivering value via the on-demand delivery model

HfS defines a future state for the services industry where As-a-Service is native to enterprise operations instead of a set of processes and technologies being retro-fitted in painful increments.  Investments are made in outcome-centric services first, followed by talent acquisition to broker these capabilities and align them to the revenue-generating, customer-first activities of the business. In the next few years, as more outsourcing engagements o down this road…leverage actionable and accessible data, common standards, automation, digital tools and apps, powered by cloud delivery, priced As-a-Service, we will need a lot more judgement, and reimagination to navigate through it all. The KPO terminology might not make a resurgence, but its distinction will continue to blur as service providers morph the business they want to be in and the value they deliver to foster genuine, long term partnerships with their clients.

Posted in : The As-a-Service Economy

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