The business world today is more competitive than ever before. In order to stay ahead of the curve, companies are always looking for ways to optimize their processes and cut costs.
This is where knowledge process outsourcing comes in. It is the act of contracting a company or individual to solve specific problems or tasks which require specialist knowledge.
There are many advantages to using this type of outsourcing as it can save businesses time and money, as well as improve efficiency levels. It also has the potential to help businesses tap into new areas of expertise and increase their competitive edge.
Not all businesses have the required manpower to solve all their problems in-house — especially when working on multiple projects simultaneously — and this is where knowledge process outsourcing comes into its own.
This guide will take you through everything you need to know about knowledge process outsourcing. We will discuss what it is, how it works, and the advantages and disadvantages of using this type of outsourcing.
Let’s get started!
What is KPO?
Knowledge process outsourcing, or KPO, is the contracting of a company or individual to solve specific problems or tasks which require specialist knowledge.
It is similar to traditional outsourcing, but with a focus on tasks that require specialist skills or knowledge.
Businesses have requirements to do with KPO arising all the time. Think of a situation where your business is trying to enter a new market.
It would be very beneficial to have access to specialist knowledge in that market, but it may not make sense to hire someone full-time for this purpose.
In cases like this, KPO can be used to get the required expertise without incurring the cost of hiring a full-time employee.
KPO is also often used when businesses need help with research and analysis. This could be anything from customer surveys to market analysis.
Often times it can be very difficult and time-consuming to do this type of research in-house, so KPO can be used to outsource this requirement to a specialist company.
Think about it — if you were to have in-house experts with highly specialized knowledge then they would be highly under-utilized and massively overpaid. KPO ensures you only hire experts when you really need the experts.
Knowledge Process Outsourcing Services
Here are some examples of where KPO has been used in real life:
1. Customer Surveys and Research
If you’re a company focusing on customer experience, you might need to constantly survey your customers in order to improve the customer experience.
This could be a very time-consuming process if done in-house, so it may make sense to outsource this requirement.
It’s also a task that requires specialist knowledge, as you need to know how to design and carry out surveys effectively in order to get useful results.
2. Market Analysis
If you’re looking to enter a new market or expand into new territory, it’s essential to carry out market research first. This will give you an idea of the potential opportunity, the level of competition, and what needs to be done in order to be successful.
If you are trying to get into a new territory or a new niche, it’s unlikely that you’ll have the in-house expertise to deal with the situation properly.
Hence this task requires specialist knowledge about the niche or territory, so it may make sense to outsource it.
3. Data Analysis
Businesses today are sitting on mountains of data, but it’s often very difficult to make sense of it all. Data analysis is a specialist skill that is required in order to understand what the data is saying and how it can be used to improve business performance.
This task is often outsourced to KPO providers as it can be very time-consuming and requires specialist coding/analytics knowledge that in-house teams usually don’t possess.
Whether it’s customer data, financial data or anything else, data analysis is something that requires special skills in order to do effectively.
4. Intellectual Property Research
If you’re in a business that relies heavily on intellectual property, it’s essential to have someone who is an expert in this area. This could be anything from patent law to copyright law.
5. Financial Analysis
Businesses need to constantly monitor their financial performance in order to make sure they are on track. This requires expert knowledge and understanding of financial concepts and principles.
You might outsource this task to a KPO provider if you don’t have the in-house expertise to carry out the analysis to the required quality.
6. Legal Research
Businesses often need to carry out legal research in order to understand their rights and obligations. This could be anything from employment law to contract law.
Imagine a former employee is wrongfully suing you — you need in-house expertise so you know your rights and have a shot at defending yourself. Legal issues are no laughing matter so it is well worth outsourcing this where possible.
7. Web Research
Businesses need to carry out web research for a variety of reasons, such as competitor analysis, market research, or even just to find suppliers.
This can be an arduous task to carry out effectively in-house, and it would be far more cost effective to outsource it.
8. Social Media Monitoring
With social media being such an important part of business today, it’s essential to have someone who is monitoring it constantly. This could be anything from looking for mentions of your company to carrying out sentiment analysis.
Search engine ranking is more important than ever before. Businesses need to make sure they are doing everything they can to improve their ranking. This includes things like keyword research, link building, and content marketing.
You could outsource this requirement to a KPO provider with expertise in SEO who is able to carry out the work effectively.
Businesses need high-quality copy for their website, marketing materials, and even just general communications.
Hiring an external copywriter can be a godsend if you’re struggling with getting clicks.
11. Editing and Proofreading
With the need for high-quality content, businesses often need to get their materials expertly edited and proofread before they are published.
A full-time editor doesn’t really make sense unless you are a content creation company. Knowledge process outsourcing seems a much more intelligent solution.
Businesses need a high-quality design for their website, marketing materials, and even just general communications.
Use KPO to hire a variety of specialist designers depending on the nature of the job.
Benefits of Knowledge Process Outsourcing
There are many benefits to outsourcing these activities to KPO providers. Here are five of the most important ones:
1. Cost Savings
One of the biggest advantages of KPO is that it can save your company a lot of money. When you outsource non-primary activities, you don’t have to invest in the infrastructure and personnel needed to support them.
This can lead to significant cost savings. Compare hiring an in-house design team throughout the year, versus hiring an external specialist design team that works on an as-needed basis. The cost savings could be monumental.
2. Focus on Core Competencies
By outsourcing non-primary activities, companies can focus their resources on their core competencies. This is the key to any successful business. When you know what your strengths are and you focus on them, you will be more likely to succeed.
3. Access to Expert Knowledge
When you outsource to KPO providers, you gain access to a pool of experts with specialized knowledge and skills.
This can be very beneficial for companies that don’t have the internal resources to support certain activities.
KPO providers offer a high degree of flexibility, which is another big advantage. They can scale their services up or down as needed to meet your company’s changing needs. This is much more difficult to do with in-house staff.
5. Improved Quality
When you outsource non-primary activities to KPO providers, you can improve the quality of those activities. This is because KPO providers are experts in their field and they have the resources to do a better job.
They also have a vested interest in doing a good job since their reputation is on the line.
Challenges of Knowledge Process Outsourcing
Now that we’ve discussed the benefits of KPO, let’s go through some of its drawbacks.
1. Who Owns Intellectual Property Rights?
This challenge comes about because when an organization outsources its knowledge processes, it is also outsourcing its intellectual property.
This can be a major concern for some organizations, particularly if they are in competitive industries.
There needs to be a clear understanding between the organization and the service provider about who owns what and how the intellectual property will be used.
2. A Lack of Security and Confidentiality
When you outsource your knowledge processes, you are essentially entrusting sensitive information to a third-party.
Strict security measures have to be in place to protect the information from being accessed by unauthorized people. The service provider should also have robust confidentiality agreements in place to protect your organization’s secrets.
3. The Challenge of Managing Remote Workers
If you outsource your knowledge processes to a service provider that is based in another country, you will need to manage a team of remote workers.
This can be a challenge, as you must ensure that they are working effectively and meeting deadlines. It can also be difficult to build up a good rapport with remote workers and ensure they remain accountable for their work.
4. The Risk of Dependence
When outsourcing, you will become reliant in some form on the service provider. This can be a risk, as if they were to suddenly stop providing the service, it would have a major impact on your organization.
You will need to have contingency plans in place in case this happens.
5. The Cost of Outsourcing
Outsourcing your knowledge processes can be costly, particularly if you use a service provider that is based in another country.
You will need to weigh up the cost of outsourcing against the benefits it will bring to your organization.
The Bottom Line
Businesses need thinkers. Imagine a situation where your business has an issue that it’s having trouble solving and needs specialist knowledge in order to do so.
Who do you ask if you lack in-house expertise in that particular area? What do you do?
Knowledge process outsourcing could be your way out. Have a browse at its benefits, drawbacks, and look at in which situations it can be used.
If you’re thinking about outsourcing certain activities, make sure to consider KPO providers. You may be surprised at how much they can help your business!