Knowledge Process Outsourcing Services

July 14, 2023
|By Gretel Digo

Knowledge process outsourcing (KPO) services encompass essential tasks that require research, analysis, and critical thinking. Within the KPO value chain, certain services may intersect with those provided by business process outsourcing (BPO), particularly in the realm of content development and publishing, which can involve both routine and analytical components. Some individuals categorize KPO as a subset of BPO, considering it as part of the broader spectrum.

Generally, knowledge process outsourcing (KPO) services make up crucial and strategically significant activities for organizations. The value of these activities increases as they demand more intensive knowledge and analytical thinking. Unlike merely cost reduction, KPO services enable companies to enhance top line growth.

In the present scenario, the range of high-value activities is expanding as knowledge process outsourcing services mature. KPO services span across various industries, professions, and trades. Some of the current KPO offerings include:

  • Financial Data Management
  • Business and Market Research
  • Marketing and Communication
  • Learning and Development
  • Sales Support and Operations
  • Consultancy
  • Data Management and Integration
  • Research and Development
  • Legal Process Outsourcing
  • Healthcare Process Outsourcing
  • Engineering Services
  • Software Development
  • Animation and Design
  • Game Development
  • Creative Services

Rapidly Growing Knowledge Process Outsourcing Services

After the COVID-19 pandemic, the business environment underwent significant changes. In this new landscape, the worldwide Knowledge Process Outsourcing (KPO) market, which was valued at approximately US$84.7 Billion in 2022, is predicted to expand substantially. It is projected to reach a revised market size of around US$374.3 Billion by 2030. This growth is expected to occur at a Compound Annual Growth Rate (CAGR) of 20.4% during the analysis period spanning from 2022 to 2030.

Areas with high potential for growth include engineering and design, animation and simulation, biotech and pharmaceuticals, research and development, paralegal content and services, financial services and insurance research, and e-learning.

BFSI Research and Analytics

Research and analytics services in the BFSI industry include insurance and risk analytics, fixed income research, equities research, library information services, data modeling, and retail banking and marketing services. KPO services under this sub-segment can be low, mid- or high-value activities: fraud and delinquency analysis, product profitability analysis, underwriting algorithms, credit scoring, attrition modeling, propensity modeling, strategic customer or domain analysis, and market research support.

BFSI research and analytics are expected to grow further due to the technology and innovation-driven nature of the BFSI industry, which have led all other industries in IT, business process, and knowledge process outsourcing.

Equity Research and Investment Banking

High-value chain services under equity research and investment banking include mergers and acquisitions (M&A) valuation model creation and support, model update and maintenance, presentation and pitch books for investors, and new idea generation for M&A contracts. Low to moderately complex tasks under this segment include industry report preparation and creation, valuation models updating, and new company initiation reports.

Data Searching and Management

Data searching and management KPO services overlap with BPO in some areas. Higher-value data searching and management activities include data collection and scrubbing, organization, searching, mining, and end-to-end management. These tasks typically require quantitative skills. The main verticals that leverage these KPO services include BFSI, biotech, pharmaceuticals, and healthcare.

Legal, Intellectual Property, and Patents Research and Processing

Legal research and processing services include document management like legal transcription, coding and tagging, document discovery like e-records review, intellectual property services such as patents and trademarks research, evidence of use analysis, art research, and legal research such as drafting of employee contracts, non-disclosure agreements, and pleadings. Legal services will continue to grow due to cost pressures among legal departments and law firms, with low-value LPO services expected to grow faster than high-value services.

Software Development

Software development services include a series of specialized tasks: research, conception, design, specification, code development, testing, and documentation. Some lower-value activities like rudimentary coding and maintenance are under BPO and performed by entry-level technicians, while higher-value development and testing activities belong under knowledge process outsourcing services and are performed by skilled and experienced programmers and IT professionals. The main buyers of software development services are organizations in the BFSI sector that require software for internal operations like finance and accounting. Another major buyer is software publishers that produce products and services for end users.

Product Development, Design and Engineering

A large number (38 percent) of small and medium-sized firms are outsourcing product development, design and engineering, according to a survey conducted by the Offshoring Research Network, Duke University. SMEs are offshoring product development because they want to increase speed to market for new products and better access science and engineering talent. India and China are top destinations for this KPO subsector due to their large pools of skilled professionals and low labor and operating costs.

Content Development and Publishing

Content development and publishing services encompass the creation and organization of content for various printed materials, including newspapers, magazines, textbooks, B2B marketing materials, and technical manuals, among others. These services are also crucial for the STEM fields (science, technology, engineering, and mathematics) and academia. Additionally, web content development and publishing form a notable sub-segment within this KPO service, demonstrating robust growth.

Engineering Services

Engineering is one of the more mature sub-segments of the KPO services industry. Examples of core, high-value engineering services are very large scale integration (VLSI) design, simulation, chip design, vehicle design support, and prototype development.

Biotechnology and Pharmaceutical Research and Development

Biotechnology and pharmaceutical firms are increasingly outsourcing research and development. Common high-value activities that are offshored include gene identification, target identification, lead identification, pre-clinical trials, clinical trials, and R&D for new drugs/consumer products. Clinical trials monitoring are performed by qualified nurses and physicians, while gene, target and lead identification are typically carried out by scientists with doctoral degrees and years of experience.

Biotech and pharma firms are looking for low-cost countries to offshore low-value services and high-talent locations for high-value services. The cost of clinical trials in developing economies is about one-tenth of the levels in North America and Western Europe, and R&D costs are about one-eighth of U.S. costs. Besides labor arbitrage benefits, developing countries also possess native patient populations in large numbers, trained scientists, and established pharmaceutical firms.

About Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.

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Sourcefit’s commitment to excellence has been recognized through numerous industry awards and certifications.

We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.

Other awards include: FT ranking of 500 high-growth Asia-Pacific, The Marketing Excellence Awards, Inquirer Growth Champion,  HR Asia Awards, among others.

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