The KPO industry involves outsourcing research and data analysis to third-party businesses, mainly in countries like China and India, where wages are lower and the population is educated. It benefits professionals looking to gain knowledge about trends, market behavior, and forecasts, and is divided into two categories: MIS reporting and decision management. Outsourcing knowledge processes can reduce costs and simplify infrastructure.
The Knowledge Process Outsourcing (KPO) industry describes all the businesses for which customers hire work. When the leader of an organization determines that he or she can benefit from research or data analysis but may not have the financial resources to pay for in-house services, he or she may hire a third party, typically in another country, to perform these tasks. . KPO industry businesses are most common in countries like 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 knowledge about trends, market behavior and forecasts can use a KPO industry business. Market research companies, for example, may outsource research to third parties that specialize in conducting research. A professional starting a business can use a KPO firm to access information about a market they are considering entering. Large financial institutions such as banks take advantage of the KPO industry to learn about the economic outlook in various industries and regions.
In the KPO industry, there are two main categories: Management Information System (MIS) reports and Decision Management. MIS reporting is the act of collecting data that allows professionals to understand how their organizations are operating. For example, a manufacturing executive might request MIS reports that allow them to understand which products are helping an organization generate the most revenue.
Decision management describes research and analysis that help professionals make informed decisions. Much of decision management in the KPO industry is focused on forecasting. When a professional is getting ready to generate effective plans and budgets, for example, he or she might outsource to a KPO firm to learn which products should increase sales and which should decrease.
Some commonly cited benefits of using KPO businesses are reduced costs and infrastructure that is less complex. By outsourcing knowledge processes to companies in other countries, a client company can potentially incur costs, as salaries in another country can be significantly lower. For example, a business professional trained in the US expects salaries well above those paid to professionals trained in a country like India, where the KPO industry is booming. Knowledge processes often require advanced software that needs to be implemented in established business systems. Outsourcing these processes allows an organization to alleviate this problem.
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