The KPO industry involves outsourcing research and data analysis tasks to third-party firms, often in countries like China and India where wages are lower and there is a highly educated population. It benefits professionals seeking market insight and forecasting, and is divided into management information systems and decision management. Outsourcing to KPO firms can result in reduced costs and less complex infrastructure.
The knowledge process outsourcing (KPO) industry describes all the companies that clients work for. When an organization’s leader determines that he can benefit from research or data analysis, but may not have the financial resources to pay for internal services, he can contract a third party, usually in another country, to perform these tasks. KPO firms are most common in nations such as China and India, where wages are relatively low, a significant percentage of the population is educated, and there is little political or social unrest.
Any professional interested in gaining insight into trends, market behavior, and forecasting could use a KPO industry activity. Market research companies, for example, may outsource research to third parties who specialize in conducting surveys. A professional starting a business can use a KPO firm to access information relating to a market she is considering entering. Large financial institutions, such as banks, take advantage of the KPO industry to learn about the economic outlook in various sectors and regions.
In the KPO industry, there are two main categories, management information systems (MIS) and decision management. MIS reporting is the act of gathering data that enables professionals to understand how their organizations operate. For example, a manufacturing executive might request an MIS report that helps them understand which products are helping an organization generate the highest revenues.
Decision management describes the research and analysis that help professionals make informed decisions. A lot of decision management in the KPO industry is focused on forecasting. When a professional prepares to generate effective plans and budgets, for example, they can outsource to a KPO company to know which products should increase in sales and which should decrease.
Some of the commonly cited benefits of using KPO firms are reduced cost and infrastructure that is less complex. By outsourcing knowledge processes to firms in other countries, a client firm can potentially incur costs, as wages in another country can be significantly lower. For example, a skilled professional in the US expects salaries well in excess of those paid to skilled professionals in a nation like India where the KPO industry is growing. Knowledge processes often require advanced software that must be implemented into established business systems. Outsourcing these processes allows an organization to alleviate this problem.
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