KPO : Knowledge Process Outsourcing

October 14, 2008 at 4:58 am · Filed under 1 ·Tagged ,

Knowledge process outsourcing (KPO) is a form of outsourcing, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans.

Process transparency is a major barrier to using KPO services Many organizations do not track carefully which decisions are made by whom, and rely so much on informal social processes (and “soft skills”) that it is unclear how much the use of KPO would disrupt existing operations. However, requirements like Sarbanes-Oxley and radical transparency movements like full cost accounting, shareholder activism and eco-labels and moral purchasing require organizations to be more explicit about when and by whom decisions are made. These trends make it easier for outsourcing non-critical jobs to be considered by qualifying the impact of decisions in advance.Furthermore, it becomes easier to evaluate and compare success. A fully developed service economy enables KPO by treating all functions as services. So do more technical trends such as service oriented architecture, enterprise application integration and telework: it is easier to outsource a job if it is already being performed outside the head office. Organizations adopting ISO 9000 and ISO 19011 should also find it much easier to integrate externally provided KPO into their operations and audit them on a fair basis.

As of 2007, most US organizations were hiring foreign professionals under H-1 visas to do jobs in the USA for several years, after which they would return to their home countries as managers to train and supervise others, continuing to report to their former business units.

What is KPO?

It is being claimed that KPO is one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping into Knowledge Process Outsourcing because of its favorable advantageous and future scope. But, let us not treat it only a ‘B’ replaced by a ‘K’. In fact, Knowledge process can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. And when this activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing.

Knowledge Processing Outsourcing (popularly known as a KPO), calls for the application of specialized domain pertinent knowledge of a high level. The KPO typically involves a component of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). KPO business entities provide typical domain-based processes, advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is handling more amount of high skilled work other than the BPO Industry. While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency.

In fact, it is the evolution and maturity of the Indian BPO sector that has given rise to yet another wave in the global outsourcing scenario: KPO or Knowledge Process Outsourcing. The success achieved by many overseas companies in outsourcing business process operations to India has encouraged many of the said companies to start outsourcing their high-end knowledge work as well. Cost savings, operational efficiencies, availability of and access to a highly skilled and talented workforce and improved quality are all underlying expectations in outsourcing high-end processes to India

The future of KPO has a high potential as it is not restricted to only Information Technology (IT) or Information Technology Enabled Services (ITES) sectors and includes other sectors like Legal Processes, Intellectual Property and Patent related services, Engineering Services, Web Development application, CAD/CAM Applications, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO ) etc.

In today’s competitive environment, focus is to concentrate on core specialization and core-competency areas and outsource the rest of the activities. Many companies and organizations have come to realize that by outsourcing non core activities, not only cost are minimized and efficiencies improved but the total business improves because the focus shifts to the key growth areas of the business activity.

Scope and Future of KPO

According to a report of National Association of Software and Services Companies (NASSCOM), the Indian chamber of commerce that serves as an interface to the Indian Software industry, Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India. Another report predicts that India will capture more than 70 percent of the KPO sector by 2010. Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also expected to join the KPO industry.

According to a recent study by “Evalueserve, a Gurgaon based outsourcing company having service chart for global world”, the global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent, from $1.2 billion in 2003 to $17 billion in 2010. Compare this with the prediction for the low-end outsourcing services market. This is expected to have a CAGR of 26 per cent, from $ 7.7 billion to $39.8 billion in the same period.

Evalueserve says India provided $3.5 billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of 36 per cent during 2004 to 2010. Hence, it is likely to earn $30 billion in 2010 by providing these services.

Says country general manager, Kelly Services, Achal Khanna “India still maintains the competitive advantage for providing, the combination of the most cost-effective and high quality manpower- this is India’s strength in the off-shoring business”.

In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO), etc.

“Over the past year or two, the outsourcing industry has been throwing up jobs for Doctors, Engineers, CAs, Architects,” says Jacob William of the Bangalore-based Outsource2India, which employs 500 people and offers services in the big-buzz, big-bucks area of knowledge process outsourcing. “Unlike the first wave which was more about entering data and answering phone calls, these jobs involve skill and expertise.”

Also, of course, the talent is much more affordable. “Law firms in the US charge an average of $400-450 per hour, and we do the same work for $75 to $100 an hour” says Kamlani” who is an outsourcing provider in the same area.

In the Indian context, KPO salaries could be 25-50 per cent higher than those offered to the same domain experts such as Engineer, Doctor, CA, Lawyer, Architect, Biotechnologist, Economist, Statistician and MBAs, it said.

In its annual publication Strategic Review 2005, Nasscom has said the high-end activity of the BPO industry—the KPO or knowledge process outsourcing could be worth $15.5 billion by 2010.

According to earlier estimates, the BPO industry itself was expected to be about $20bn by 2008, hence a very significant portion of the sector—in excess of 50% is now projected to be knowledge based. This represents significant metamorphosis of call centre sector business to completely different model. Interestingly, Sunil Mehta, Nasscom vice-president research, distances himself from the estimates.

The projections are based on a white paper released by Evalueserve. The paper cites reasons for a possible KPO boom. It says higher savings by outsourcing knowledge based activities combined with the scarcity of specialized talent in developed countries could lead to growth in the KPO sector.
Billing rates for KPO are higher at $30-45 per hour compared to just $10-14 in the BPO business. However, the paper also warns of several challenges like higher quality standards, greater investments and inadequate talent.

The study estimates that while the compounded growth rate of BPO till 2010 would be just 26% KPO is expected to be grow at almost 46%.

Bottlenecks in Future Growth

A study on Knowledge Process Outsourcing (KPO) sector shows a huge supply gap that threatens to cripple its growth. Rocsearch, a UK-based research services company, has gathered evidence suggesting that the KPO market may just about reach a size of $5 billion by 2010, manned by 100,000 people instead of projections of a $12 billion market supported by 250,000 employees.

This accentuates Nasscom’s projections of a shortfall of 500,000 workers in ITES and BPO sectors by 2010.

Assuming an average revenue per person of $55,000 over the next four years, 100,000 knowledge workers point to a $5 billion market. This size, though based on a CAGR of 32%, is still 60% less than the $12 billion potential projected by big KPOs, like Evalueserve, last year.

Rocsearch COO, Ashish Sinha says the sector is restricted by low employability despite high graduate turnout, and competing demand from other sectors as jobs grow faster than the workforce.

For example, all the 2,000-odd IIM and top 10 B-School graduates are employable, while less than half the 84,000 graduates from Tier-II B-Schools would make the grade.

The study sees only 500,000 of the over 3 million workers added to the labour pool in 2005 as employable in global firms and of these, just 2 in every 100 are likely to opt for work in knowledge space.

Regional Advantages and Domains of Expertise

Due to the availability of large numbers of skilled staff working for lower pay rates than in the developed world, a few countries like India and the Philippines are front runners in providing these services. This type of work demands advanced analysis and communication, so specific higher education and language skills are essential. MBAs, Pharmacists, PhDs, engineers, doctors, lawyers, writers, ghostwriters, designers, web designers and other specialists with formal credentials tend to be required.

In India as well as the Philippines, KPO is envisaged as having a high potential[citation needed], not only in the Information Technology (IT) or Information Technology Enabled Services (ITES) sectors; it could include patent and copyright related services, other legal research functions, business intelligence and analytics, clinical research, publishing and supply chain management, all of which require a large number of small decisions, and the final products of which tend to be relatively easy to evaluate for accuracy or effectiveness.

The maturity of the BPO sector in both countries gives it an obvious lead in KPO, essentially an offshoot of BPO. It is the high-end activity of the BPO industry and as of 2007 was estimated to provide substantial growth over the next few years. More complex fields of work that the Indian KPO industry focuses on include intellectual property or patent research, content development, R&D in pharmaceuticals and biotechnology, market research, equity research, data research, database creation, analytical services, financial modeling, design and development in automotive and aerospace industries, animation and simulation, medical content and services, remote education and e-learning, publishing and legal support.

Some practitioners argue that one region likely to suffer extreme job loss due to KPO is the USA. Princeton economist Alan Blinder estimates 40 million white-collar jobs in the US alone could move offshore in a decade or two.

Challenges to Providers

  • In addition to the challenges faced by clients, KPO companies themselves have challenges:
  • High staff turnover, especially where work is not challenging to the employee’s skills
  • High cost of training and tendency to lose the most experienced employees to the clients
  • Ensuring the security and confidentiality of information, especially when privacy laws vary from country to country

Market Research

Leaders in the market research industry are slowly seeing the benefits offered by KPO and have begun outsourcing.[citation needed] Comprehensive IT solutions are offered by vendors who provide solutions covering the entire life cycle of a market research project. Smaller firms can also benefit from these solutions as they are cost effective and remain within the budget of smaller organizations.
KPO is claimed to efficiently increase productivity and increase cost savings in the area of market research.[citation needed] Advocates claim that the trend is likely to prove increasingly popular in the global market research industry.

Source from:
 http://knol.google.com/k/naidu-sanapala/kpo-knowledge-process-outsourcing/23nfeaobzevcu/2?locale=en#

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BPO Companies Have Taken a Hit as US Crisis Deepens

October 6, 2008 at 8:45 am · Filed under KPO Outsourcing ·Tagged ,

The BPO-KPO sector in India is facing the heat of the US slowdown , particularly following recent events in the financial markets. Businesses of a host of small- and mid-sized firms have taken a further hit in the industry since a major chunk of business comes from banking and financial services firms in the US.

“The slowdown is going to impact the BPO firms in India. This will eventually result in overall slowdown of the BPO industry . But now a large pool of professionals will be able to provide quality services to the Indian BPOKPO industry at much lower prices,” says IDBI Capital Market Services research head Shahina Mukadam.

According to a report released by Nasscom, the BPO and KPO industry together generated Rs 1,160 crore revenue and provided employment to 7 lakh people in 2007-08 . The share of the US in the Indian BPO-KPO export market was 61%, making it the largest contributor to exports in the segment in 2007. Ahmedabad-based KPO, Azure Knowledge Centre, foresees a slowdown in the financial services by 25% and in the insurance services by 15% by the end of this year.

Azure Knowledge Centre director Jay Ruparel says, “The debacle in the US will create a lot of uncertainties regarding the continuity of current financial services contracts and also raise doubts as to how the future contracts are signed with the US financial companies.” So far, this company has hired four people from Lehman Brothers and Merrill Lynch.

“The employment scenario in the KPO-BPO industry is going through an extremely dull patch and this in turn will have an effect on the growth in this industry,” says Karvy Stock Broking vicepresident Ambareesh Baliga.

Gurgaon-based KPO, The Smart Cube, has 130 employees at present and it is expected that the employment rate of the firm will go down by 30% till next year.

The Smart Cube managing director Sameer Walia says, “Future hiring rate of BPOs will be far worse off as compared to the KPO firms. The BPO employment rate is projected to decline by 60% within a span of one year.”

However, Exevo COO Vivek Sharma says, “I see an immediate-term negative impact, which will continue for around six to nine months. But in the long term, any other financial institution will fill up the space vacated by Lehman Brothers. We have received around 50 resumes from ex-employees of Lehman Brothers in the past two days.”

Source from: Economic Times

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KPOs are Talent Breeding Ground

October 6, 2008 at 8:39 am · Filed under KPO Outsourcing ·Tagged , ,

Most bulge-bracket investment banks are aggressively reducing their headcount or limiting the number of new positions available and have been looking to leading KPOs to pick up much of the slack. As the work being outsourced these days is similar to what an internal research associate or analyst would do, KPOs have become a breeding ground for developing talent.

KPOs have now expanded their operations to gain a “research edge,” allowing clients not just to look for cost efficiencies but focusing more on domain and regional expertise provided.

In the past, much of the KPO space was hampered by higher-than-average attrition rates as KPOs typically based their operations in low-cost countries to capture wage arbitrage. Interestingly, leading KPOs have now expanded their operations to gain a “research edge,” allowing clients not just to look for cost efficiencies but focusing more on domain and regional expertise provided. To attain region-specific expertise, KPO providers are tapping local talent by establishing research centers in countries such as Chile, Argentina, China and Romania.

Another clear sign that the KPO industry is shifting its focus from cost to knowledge efficiencies is the significant halt in headcounts at captives. A recent study by NASSCOM-Everest that examined the arbitrage opportunity for India’s outsourcing industry concluded that the “arbitrage window” may diminish in the medium term, providing several scenarios that include a range of currency and inflation rates. Given this stark view, it comes as no surprise that firms are shifting their strategy with respect to their own captives and third party providers are seeking ways to remain competitive.

Top talent that understands the work is similar to an internal role and also wants to gain experience across different investment banks and investment management firms have made the KPO space their sector of choice. “We have seen an increasing number of analysts ask about roles with KPO firms recently, especially from the investment banking sector where hours are long and job security is becoming increasingly tenuous,” says Amar Gautam, managing director for N.Y.-based recruiting firm, Archive Partners. “Initially attracted to the KPO space for lifestyle reasons, analysts are now looking to KPOs for the quality of work being performed and the exposure.”

KPO firms provide a platform of knowledge and experience through a vast array of engagements that the firm has.

While an investment banking associate will often work directly with one analyst or team, KPO firms provide a platform of knowledge and experience through a vast array of engagements that the firm has. While engagements adhere to the strict confidentiality protocols most banks have in place, the depth of learning is something that KPO analysts have found to be a valuable addition in their toolkit.

An analyst can complement their educational knowledge with hands-on experience based on the specific processes and methodologies that are built for a predefined set of deliverables. In essence, the KPO space takes the art of research into a more structured format similar to what top-tier consulting firms have been doing for years. What’s required is for bright minds to be able to execute these processes.

The training process within the KPO space is rigorous, yet hands-on, as training modules are often created for different deliverables for a specific set of clients.

The training process within the KPO space is rigorous, yet hands-on, as training modules are often created for different deliverables for a specific set of clients. In one instance, an analyst will work directly for a multi-billion dollar hedge fund manager, giving them an opportunity to learn and develop their skill sets according to that client’s requirements.

When an analyst grows out of their role, they don’t need to search for another job, but just request that their skill set be used for a more advanced client engagement. It is in this type of environment where a steep learning curve never appears to end. For a willing and able analyst, this is a real asset to their portfolio that can be amassed in a relatively short time frame. This has been a key driver for the industry, as an analyst can gain experience within just a few years that is equivalent to working at several leading financial firms.

KPO’s often work with the Who’s Who of investment banks, hedge funds, venture funds, research firms and asset managers across different regions and sectors, making them an attractive way for analysts to gain essential investment research experience. As many financial services firms aggressively recruit from top KPO firms, it is astounding that many analysts opt for more experience rather than the near-term monetary gain. Gautam added, “Today, KPO recruiters are regularly competing with investment banks for the same talent. This was not the case three years ago.”

The growth within the KPO space has also created the opportunity to build a solid career track in the sector. For those aspiring to move up the corporate ranks into a senior management role, the fast pace and people-centric environment of a KPO firm provides a great setting for leadership development. As many leading KPO firms post high double-digit employee and revenue growth figures, grooming internal leadership continues to be an important area for this industry. Managers are required not only to have domain expertise and manage a large team of analysts but also have the ability to manage growth in a fast-paced multilingual and multicultural environment.

KPO firm provides a great setting for leadership development.

One must wonder if these analysts joining KPO firms are running the numbers to assign a value to experience that’s greater than cash in hand. It’s reminiscent of the calculations most MBA graduates made prior to entering their respective programs.

Source from: Indusbusinessjournal.com

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KPO Firms Don’t Lose Heart Despite Wall Street Woes

September 29, 2008 at 4:38 am · Filed under KPO Outsourcing ·Tagged , ,

The Wall Street collapse will take the most toll on the knowledge process outsourcing (KPO) business in India , according to industry experts, but firms are optimistic that the meltdown will still create opportunities for outsourcing. The filing of bankruptcy by investment bank Lehman Brothers has hit its KPO services provider eClerx Services, hard. The KPO firm earned around 13% of its business from Lehman Brothers.

“Lehman Brothers was one of our top five clients, and their collapse will definitely affect the business in a negative way. But it will be a short-term affect,” commented PD Mundhra, executive director, eClerx Services.

Mundhra also added that the fall of such investment firms are more like to affect KPOs rather than the business process outsourcing firms (BPOs).

“Since investment banks are more likely to work with KPOs. In such a cenario, KPOs are more likely to get affected,” said Mundhra. However, according to an industry analyst, things are not as gloomy as they seem to be.

“The service providers dealing with the investment firm will definitely be affected. But on the other hand, if the company gets taken over by someone else, the same businesses would need to be dealt with.

Hence, the KPO and BPO services will be required as before. Whether the projects stay with the same service provider or go to competition is a different issue,” commented the analyst. “The outsourcing work will stay, only it might go to some other provider,” he added.

eClerx is hopeful that the buyer of the US business of Lehman Brothers will continue with eClerx’s services.

“We are hoping that the buyer of Lehman’s US business will continue with our services. We’ll come to know about the situation in a couple of weeks,” said Mundhra.

Industry experts are also hopeful that during such a financial meltdown, outsourcing assignments are more likely to increase as the companies overseas are keen about cost cutting.

“During such a financial turmoil, companies will be looking at every opportunity to save cost, since this is the time where more and more work should be outsourced,” commented an analyst.

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The Future of LPO and KPO in India

September 26, 2008 at 5:08 am · Filed under KPO Outsourcing ·Tagged , ,

There is a difference between LPO and KPO, the latter requires “domain-specific expertise” that few Indian firms possess. The market for ICT-related LPO and KPO services in India is emerging and more is expected from market leaders like Perry4Law..

THE FUTURE of any organisation depends upon the capability of its workforce and to retain such workforce it has to invest considerably. This expenditure may at times increase the cost of production or operating the organisation. Organisations use many types of cost management and cost reduction techniques to minimise their expenses. This practice also applies to the legal industry.

Legal practice is very lucrative and remunerative in developed countries like US, UK and the European Union. There the cost of retaining even entry-level employees is very high. Many well known law firms of these developed countries outsource their back office and clerical work to Legal Process Outsourcing (LPO) companies in India.

According to Praveen Dalal, managing partner of the internationally renowned LPO and techno-legal KPO Perry4Law, “LPO in India is attracting lot of foreign firms and companies to outsource their legal works to India. During the last month alone, Perry4Law received various requests regarding partnerships, LPO assignments, empanelment requests, etc.

We are hopeful of even a larger services contribution when the Knowledge Process Outsourcing (KPO) industry in India would emerge and mature as Perry4Law is world renowned for it techno-legal KPO services.

Clearly, there is a difference between the current LPO assignments and future KPO assignments as the latter requires “domain-specific expertise” that very few firms actually possess in India. Similarly, the market for information and communication technology (ICT)-related LPO and KPO services in India is still emerging and more is expected from market leaders like Perry4Law in the said market.

LPO and KPO assignments are bound to increase owing to developments like the global financial meltdown that has now unnerved the US. More and more corporate houses and investment banks from the US are looking towards the Indian LPO industry for legal advice. In the present globalised world, India is surely heading for a great start.

Source from: Merinews.com

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‘Studio I’ to Handle Architectural KPO

September 24, 2008 at 4:49 am · Filed under Architecture ·Tagged , , ,

Gensler, the San Francisco-based architecture design company, and Singapore-based architecture firm, Space Matrix, have set up their joint venture — ‘Studio i’ in Bangalore. ‘Studio i’ has been set up to handle architectural and interior design knowledge process outsourcing (KPO).

The company’s operations will be carried out from its facility at Divyashree Park SEZ in Whitefield, Bangalore.

Addressing a press conference here on Tuesday, Anurag Srivastava, chief executive officer, Space Matrix, said, “Key factors like design capacity, cost and capability of Indian talent has led Gensler to form a joint venture with us. Through Studio i, Gensler will have access to trained architects and designers for its execution globally.”

“In addition to architecture services, design development and construction documentation will also be taken up in India. The team will get involved right at the design phase based on project needs and goes up to their execution,” he added.

Initially, the company plans to recruit about 20 persons to begin operations and gradually increase the strength to 150 to 200 by end of first year of operations depending on the projects to support Gensler requirements.

According to Daniel W Winey, managing principal, pacific northwest and Asia, Gensler, “In addition to KPO, our strength in building high raise structures will be put to use through Space Matrix in India. But, here we are facing many difficulties by way of different bye laws which govern construction and execution of high rises.”

Gensler and Space Matrix presently have 10-12 projects in hand through partnership and on a standalone basis totalling 10 million square feet, valued between $75 million and $1 billion in residential, airports and office space accommodation.

Prominent projects include designing airports at Chennai, Goa and Vadodara, design and development of twin towers — a 1.5 million square feet residential project for Divyashree Developers in Bangalore.

A five million square feet mixed use (retail, office and hospitality ) project for Bajaj Hindustan in Hyderabad.

“Space Matrix, on its own, has about 100 projects in their various stages of construction. India plays a vital role for us and 65 per cent of our revenues are generated here,” said Srivastava.

Source from: Business-Standard.com

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Why We Picked China For IT Outsourcing

September 22, 2008 at 5:57 am · Filed under IT Outsourcing ·Tagged

The decision to outsource product development to China pays off for NeatReceipts.

After several years of strong sales, a growing worldwide customer base, and increasing competition, NeatReceipts reached a crossroads in 2007: Should we continue product development efforts in-house in the United States, or outsource some of these efforts?

Several factors spurred us to consider outsourcing. For one, we’d been trying to fill a number of open positions without much success. We manufacture products based on cutting-edge optical character recognition technology, and the engineering is complex and demanding. Product development cycles are short. However, because we’re based in Philadelphia–not a technology capital–we don’t have access to a broad pool of engineering talent. Outsourcing product development could potentially lower our development costs and get products to customers faster.

The decision to outsource some of our development was by no means an easy one. We wanted to keep strategic development onshore, close to our stakeholders, and use an offshore team to add skills that we have a difficult time hiring in the United States. However, we were wary of outsourcing because we had to safeguard our intellectual property, as well as customer and employee data, and weren’t sure outsourcing partners could deliver high-quality work against an aggressive product development cycle. We also needed to ensure that we could effectively integrate an outsourcing partner into an already high-performing team.

After detailed discussions with our IT and business decision makers, we decided the benefits of outsourcing product development did indeed outweigh the risks. Of course, cost can’t be overlooked when determining whether outsourcing product development is the right decision. An analysis of the numbers validated our decision to move ahead with outsourcing.

Outsourcing development would be significantly less expensive than recruiting, managing, and retaining a team of U.S.-based engineers, but India is becoming increasingly expensive–with engineering talent on average costing about 75% to 80% of what we would pay onshore.

China is decidedly more affordable, with engineering talent costing about half of what we would have to pay onshore.

NeatReceipts competes globally with larger rivals, so the cost advantages of outsourcing our product development to China were compelling. We also thought that since we have manufacturing operations in China, it made sense to build a software development presence there.

In October 2007, we decided to outsource our product development operations to China.

THREE CHALLENGES
China is a fascinating place in which to do business and is becoming a top location for outsourcing because it has a large supply of engineers capable of doing highly sophisticated product development work. Also, the rapidly expanding Chinese economy presents a major business opportunity. NeatReceipts saw establishing a product development team in China as an important step in expanding our business operations there.

There also were three distinct challenges to outsourcing our product development to China. First is the language barrier. Few engineers in China speak English, which is a challenge for any U.S.-based engineering team that must interact daily with Chinese colleagues.

The second obstacle is the general lack of project management expertise. China’s universities produce software engineers who are just as skilled as their Indian and U.S. counterparts, but this is the first generation of engineers, and the workforce lacks people with project management experience. This can pose a significant management challenge, given the need for the Chinese team to work autonomously to deliver results.

Developing a strategy to manage the 12-hour time difference between Beijing and our Philadelphia headquarters was the final issue. And anyone accustomed to coordinating teams across time zones knows that this can be daunting.

With our decision to outsource to China made, we evaluated several outsourced product development firms on the quality of engineering talent available in the regions in which they’d established development centers and on their expertise and history of working with independent software vendors. We needed a partner who understood that our revenue is tied directly to the success of our technology.

We decided to work with Symphony Services because the company had product engineering expertise and strong test-automation and quality-assurance capabilities, which helped us improve the productivity of our development process and speed the time to market for our products. Symphony’s newly opened China development center provided access to the growing base of engineering talent in Beijing.

We started building out the China development team in 2007; it’s now 10 members strong and growing. The language barrier proved to be the least daunting of the challenges we faced. Working closely with Symphony to identify the right candidates to meet our needs, we were able to secure a team leader with strong English skills. This greatly facilitated communication between the Chinese and U.S. teams and ensured that issues could be resolved before they threw the product development cycle off-track.

We also made the appropriate investment to ensure that the Chinese team felt comfortable working within our agile product development framework. The reward systems inherent in this system were especially appealing to the team.

MANAGEMENT ACROSS TIME

Weigh Your China Options
PROS CONS
Less-Expensive Labor Cultural/language barriers
Faster project devlopment 12 hour time difference, or more
Establishing presence in potentially huge market Potential for theft or loss of intellectual property or customer data

Few issues are more likely to knock a project off-track than delays caused by time-zone differences. The time difference between Beijing and Philadelphia is a massive 12 hours, and it grows to 13 hours when daylight saving time kicks in.

We address this by keeping product development plans extremely organized. Managers in the United States are in daily contact with their Chinese counterparts (at times when both teams are working) and the entire team meets twice each week via videoconference to determine where the team stands with regard to product development objectives. We also use TargetProcess software for project management, and instant messaging and e-mail for ad hoc communication.

It hasn’t always been easy, but our outsourcing initiative has translated into results: Since December, the Beijing team has helped deliver two new products–a NeatReceipts upgrade and NeatDesk desktop scanner–and has played a central role in developing a robust automated software testing framework. These results, coupled with huge cost savings, have confirmed for us the business case for outsourcing in China.

By Jeff Burk
Source from: InformationWeek

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Black Book Survey 2008 Results of the Top KPO Outsourcing Vendors

September 16, 2008 at 5:39 am · Filed under KPO Outsourcing ·Tagged

Researchandmarkets.com has announced the addition of the “Top KPO Outsourcing Vendors, Black Book Survey 2008 Results” report to their offering.

Experts predict that the Knowledge Process Offshoring world-wide is expected to grow to US $16.7 billion in revenue by 2010-2011 implying an annual growth rate of 39 percent and it will employ approximately 350,000 professionals by March 2011. Furthermore, the Knowledge Process Offshoring industry in India is expected to grow to US $11.2 billion in revenue by 2010-2011 and will employ approximately 255,000 professionals by March 2011.

The vast pool of educated and experienced professionals in countries like India, China, Russia, Poland, the Philippines, Hungary and many republics from the erstwhile Soviet Union are providing the KPO market sector with the fuel for growth.

KPO is driven by factors like breadth and depth of coverage, domain expertise, location advantage (e.g., near-shoring and language capabilities), sales and marketing capabilities, data compliance with respect to regulatory standards (especially those defined by the United States, Canada and the European Union) and the management of business risks. Clearly, the leaders in KPO in 2008 have demonstrated the expertise of market focus and customer centricity.

The marketplace results of this comprehensive research study are used by

  • Current outsourcing clients to compare other users’ experiences with similar and competitive KPO vendors;
  • Prospective outsourcing clients to long list vendors in the RFI stages, or contrast final cut vendors in selection stages;
  • Investors, venture capital firms, analysts, advisors and bankers in making financing decisions;
  • Media and press to recognize industry outsourcing trends as collected from client ballots; and
  • Most Service Providers to inform their go-to-market strategies, assess their perceived strengths and weaknesses, educate their staffs, communicate to a wider market, and fine-tune their improvement and marketing position programs.

The end-user groups that participate use the data as a tool to benchmark their own satisfaction compared to that of other KPO service providers. It also provides them with the opportunity to understand the perceived strengths and weaknesses of their service providers compared to the market at large.

Who Participates in the Black Book Ranking Process

Over 400,000 individuals are invited to participate annually (including C officers of the Fortune 2000, Inc 500, institutional members and officers of various professional organizations, subscribers of our media partners and previously validated survey participants). Non-invitation receiving participants must complete a verifiable profile, utilize a valid corporate email address and are then included as well. Over 24,000 users were validated in the 2008 ranking process.

Key Topics Covered:

  • Introduction
  • Summary
  • Methodology
  • Predicted High Growth KPO Verticals
  • Top 20 KPO Vendors
  • Top 5 KPO Vendors by Service Segment
  • Stop Light Scoring Key
  • Overview of KPI Leaders
  • Raw Scores and Means
  • Individual Key Performance Indicator Detail

Companies Mentioned:

  • Accenture
  • Adventity
  • Amba Research
  • Aptara
  • Copal Partners
  • Evaluserve
  • EXL Service Inductis
  • Genpact
  • iFlex
  • iGATE
  • Infosys Progeon
  • Innodata Isogen
  • Integreon
  • Mindcrest
  • MphasiS
  • OPI
  • RR Donnelley/Office Tiger
  • Satyam BPO
  • Wipro
  • WNS

For more information visit http://www.researchandmarkets.com/research/430184/top_kpo_outsourcin.

Source Article published at: Marketwatch.com

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Engg Srvcs Exports (Excluding IT/Telecom) Cross Rs 10000cr

August 25, 2008 at 4:46 am · Filed under Engineering, IT Outsourcing

A study by CyberMedia group’s flagship IT magazine, Dataquest says that driven by the offset requirements of India’s defense purchase and the country’s enhanced profile as an engineering base after the launch of Nano, engineering services outsourcing to India will accelerate.

The engineering services exports (excluding software product engineering, semiconductor design, and other high tech/telecom engineering) from India grew 25.6% in 2007-08 to reach Rs. 10,110 crore, according to a study published by Dataquest, the flagship IT publication of CyberMedia group. The Indian third party service providers accounted for 56% of that revenue, while the captives had a share of 41%. The non-Indian third party service providers accounted for the rest.

Aerospace and automotive industries led the engineering design and services outsourcing to India. A few recent developments in these industries have significantly impacted the engineering services outsourcing, says the Dataquest study. Some of these include: high oil prices leading to design of newer fuel-efficient cars, India’s plans to buy 100 plus fighter aircrafts with significant offset requirements (which stipulates that 50% of the total contract value to any supplier will have to be spent locally), and the launch of Tata Motor’s Nano, which has raised the profile of India as an automotive engineering base.

“All these developments have significantly enhanced the action in the engineering services outsourcing area. They have paved the way for the revenues to start flowing in beginning this year when we can expect the growth to accelerate sharply,” said Shyamanuja Das, Editor, Dataquest, who led the research.

The study also outlines that India’s own market as a major automotive market has drawn many of the automotive manufacturers and their tier one OEM suppliers to India. Most of them have also used the opportunity to tap India’s engineering talent. Car manufacturers such as Ford, GM, Chrysler Honda, and Volkswagen and their suppliers such as Delphi, Eaton, and Visteon have all set up engineering design centers in India.

Top Players

The top 15 firms account for 93% of the total engineering services exported by the India-based engineering services firms. India’s top IT services firm, TCS, leads the list, followed by HCL and Satyam. The list itself is a mix of three types of players — the broad-based IT services firms such as TCS, HCL, Satyam, Infosys, and Wipro; the specialized players such as Infotech Enterprise, Quest, Geometric and Neilsoft; and the design arms of Indian engineering companies such as Tata Technologies, Mahindra Engineering Services and L&T Infotech.

Source from: news.moneycontrol.com/india/news/pressnews/
engg-srvcs-exports-(excluding-ittelecom)-cross-rs-10000cr/18/48/353052

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Beyond Cost Benefits of CAD Drafting Outsourcing

August 22, 2008 at 4:54 am · Filed under Architecture ·Tagged , ,

Research studies have explored that outsourcing non-core operations (like CAD drafting, IT Infrastructure Management) to an expert in that field brings about a minimum 33% overall growth for the company. This is apart from the obvious monetary margins gained through outsourcing where services can be availed for as low as ten times the cost of doing it internally.

In the case of architectural firms, the best model for growth is to do the design phase through the resident architects and outsource the architectural drafting segment to some drafting support services provider. With the rapid advancement in IT and convergence systems, global barriers have dissolved to create a unified work platform.

Outsourcing architectural services not only helps meet the cost bottom-line, but also gives access to experts in the field. It is the core functionality of the outsourcing architectural service provider.
Global architectural firms have been able to effectively manage their scales by taking help of CAD conversion services, along with modern solutions like CAD 3D Modeling, etc. Outsourcing the CAD design and drafting segment allows architectural companies to sharpen their focus on marketing their projects or in coming up with innovative designs, new construction techniques, etc.

Outsourcing CAD services gives access to expert “skills-on-tap” around the clock. In case you experience a sudden surge in your work load, you can easily ramp-up your capacities with the help of CAD services partner, located overseas. CAD drawings need to be turned around sooner for quicker execution of the project. Most CAD conversion service providers understand this and build their business around this theme. Therefore, you do not have to be unnervingly wary about the service promptness of the outsourcing architectural services company.

CAD design is taking the world by a storm. In fact, there’s another tornado round the corner, christened as CAD 3D Modeling. The future growth of all architectural firms, no matter big or small, is going to be determined by how good they deliver their services, while keeping the costs to mass levels. This is where architectural outsourcing service providers step in. They are your sure-fire missiles in obtaining the intended end-result while keeping the pressure of costs under cool.

It doesn’t make sound economical sense if a company doesn’t leverage the benefits of a flat world, which we live in. It is only very practical to tap the human resources of a region who offer their services for a price that wouldn’t cost you the Earth.

Submitted by Architecture.BluEnt.Net

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