The Hindu Business Line : Outsourcing with an edge

For all those who have been tracking the `flavours' of the year, the latest buzzword in the media is KPO (Knowledge Process Outsourcing). In a nutshell, KPO is a genre of corporates oriented to higher value-add (than BPO that is), analytics-related, professional services.

Higher qualification not wasted

The arrival of KPOs has come as a blessing to a generation of students who were wondering whether their expensive, hard-earned `pedigree' education was of any use. This pessimism in the face of the seemingly `easy money' options that the BPO culture had spawned - all you needed was a reasonable accent to be assured of a 25K-a-month job!

So, what joy could a fancy B-School degree bestow?

Well, KPOs as we now know, are a league apart - by their very name, they are knowledge-oriented. The evolution of the outsourcing industry reveals three phases:

In the beginning, we had the back-end knowledge arms of the big league consultancies and investment banks. They started out as , and still largely continue to be, captive arms of their parent organisations (except Genpact that has gone on record to state that expectations from `outside' revenues is 40-50 per cent of total by 2008).

The next phase saw the arrival of large BPO firms that began moving up the value chain and doing more knowledge-oriented work - this is the classic case of milking the cow, in this case the client.

Seen evolving almost in parallel, were the pure-play, homegrown, KPOs that have mushroomed at centres across India. They offer a range of services from expertise in certain verticals/offerings to more broad-based, one-stop-shop kind of places. From close to 10 in 2004, they would easily number at least 6-10 times that today.

Across all kinds of KPOs, however, the benefits of working at a KPO are common. Speaking from the perspective of a `pure play,' start-up KPO, I would like to enumerate a few benefits:

Job satisfaction

I think the first and foremost benefit of working in a knowledge-oriented position is the sheer joy of exercising your `grey' cells - many KPOs, specially those at the higher end of the value chain, are engaged in evolved value-based analytics, jobs that in the Western world are done by the `Big five' consultants. This is an area where the arbitrage of labour is the clear advantage; they utilise brainpower similar to that found abroad, but pay for it in rupees instead of dollars.

Exposure to Western clients

Many KPOs boast a client list made up of Fortune 500 companies. Working with such clients boosts one's confidence.

Exposure to varied domains

Many of the new breeds of KPOs undertake any or all of the projects that come their way, rather than specialising in any one, especially in the beginning. This ensures tremendous variety, and great learning for employees.

`Generalist' vs `specialist'

Depending on the functional stream you are employed in, you have the option of either becoming a jack (nay, master) of all trades or master of one!

At Empower Research, a pure-play KPO, there are two main functional streams - one, where the value proposition is time critical, calling for quick, yet, in-depth analysis of various business problems. The second stream is where the product is competitive intelligence focussed on a single company, issue, or product. This helps one to develop expertise in the area and ensures that he or she is completely in touch with cutting edge developments happening in that field.

Creativity, intellectual stimulation

At KPOs, there are no `factory like automatons' (remember Floyd and The Wall?). Every problem is different, and has its own, creative solution.

Competitive remuneration

Due to a brutal war for talent, especially in cities such as Bangalore, which is a hotbed for BPOs, organisations are having to look at benchmarking studies. The situation is sometimes more difficult for the smaller brand names — the pure-play `start-up' kind of organisations like KPOs — who have to pay premiums over the larger names with deeper pockets, in order to draw the right talent.

Added to the benefits listed above is the sudden attention that the industry is drawing — not only from media, but also from the investing community. For example, the acquisition of the older/pioneering KPO, Office Tiger, the poster-child of this industry, by its client, R R Donelly, for a multiple estimated at 3X.

A larger success has been the recent acquisition by WNS of Marketics, a Bangalore-based organisation for a reported 8X multiple.These multiples just underscore the point about the much greater value these KPOs bring - not merely to their employees, but also to their clients.

The caveats

Lets make no bones - it's a hard life - long hours, intense, unremitting projects, sometimes a not-too-great work environment; and clients who may not be able to or willing to understand and be reasonable about the cultural gaps. But in the end, almost always, it does seem worthwhile, and a good use of the `education' that we Indians are so fond of getting. Surprisingly, attrition rates are far lower than the frightening numbers heard about in the BPO organisations.

The people who are looking at starting up or working at KPOs generally fall into the following stereotypes:

`The jerries' who quit the `rat' race! Mainly ex-executives who are now looking to run their own organisations, having been bitten by the `entrepreneurship bug.' They are very often the people who have climbed to the highest level in Maslow's hierarchy - having `been there' and `done that,' they are looking for the next mountain to scale to achieve fulfilment.

`The starving-for-intellectual-work moms,' or a breed of ex-corporate employees, at home now for family reasons. For such employees seeking part-time and flex-time options, KPOs are manna from heaven.

The `eager beavers' or the batch of young, fresh B-School grads looking for learning and exposure in their jobs

The `experimenters'come from other fields of activity such as BPOs, market research, and teaching, seeking a change in their work profiles. The motivation for them would be the desire to work in a sunrise industry, leveraging the expertise and skills developed earlier.

(The writer is Co-Founder and Managing Partner of EmPower Research Knowledge Services Private Ltd, a KPO.)

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