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Knowledge Process oshoring (KPo):A BAlAnced View o An emerging mArKet

exuv suay

There is considerable interest in the emergent global market for knowledgeprocess offshoring (KPO). However, much ambiguity also exists. There is alsoconsiderable discussion around the growth of this industry, mostly projectedaggressively, in the range of 50-70 percent on a compound annual growth rate(CAGR) basis. Opinions span the full range whether in terms of predictions ofindustry growth rates or in estimations of available talent and service providers toperform KPO services.

A gamut of information technology (IT) and business process (BP) activities forenterprises have been offshored to global locations for the last ten years. Thecapabilities and services around these activities are provided by service providersthrough their global delivery centers. IT and BP offshoring has grown at a CAGR of34 percent over the last ve years and is expected to grow at about 24 percentover the next three to four years. The offshoring of the middle-ofce and theperformance of certain critical and high-end KPO functions in an enterprise havebeen increasingly explored over the last three to four years.

As the next step in the evolution of global service delivery (GSD) and thematuration of organizations use of GSD, many enterprises are now exploring theoffshoring of the middle ofce, as well as the performance of certain critical andhigh-end KPO functions.

In an effort to understand the growing phenomenon of KPO and its true potential,TPI felt it critical to execute an extensive research exercise to develop an objectiveand balanced analysis of the KPO market. The research also aimed to analyze thepotential for such services based on a realistic description of KPO and in light ofwhat processes are currently being or could potentially be performed within anoffshore environment.

The research was conducted using both primary and secondary sources. TPI

considered a total of about 73 service providers and 45 captives in India for theresearch. These were organizations claiming to have or provide KPO services.However, we found that only 64 service providers and 23 captives performedknowledge services operations, as per our denition. These covered a total ofmore than 18,000 resources. The primary research covered 33 KPO serviceproviders and the secondary research covered the remaining 31. Among thecaptives, we carried out primary research among three and secondary researchamong the remaining 20. The main areas of information covered were size andscale of operations, number of resources, locations, revenues, types of KPOservices provided to clients and future outlook.

July 2007

y Indy Banerjee, Director, TPI

i Narendran, Business Intelligence

anager, TPI

ukmini Priyadarshini, Senior Research

nalyst, TPI

xecutive Summary 1

KPO Is Dierent and Will

Evolve Dierently 2

Critical Success Factors in

Oshoring Knowledge Work 2

Key Conclusions on KPO Growth 3

ackground 4

PI Research and Analysis

ethodology 4

PIs Deinition o KPO 4

Services That Constitute

Knowledge Process Oshoring 5

urrent Market Dynamics o KPO 5

Players in KPO 5

Types o KPO Activities 5

Financial Services KPO 6

Business Intelligence and

Market Research 6

ritical Success Factors or KPO 7

Key Factors Aecting the

Growth o the KPO Industry 8onclusions on the Future

o the Industry 10

A TPI RESEARCH REPORT

Copyright 2008 All Rights Reservedchnology Partners International, Inc.

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Copyright 2008 All Rights ReservedTechnology Partners International, Inc.

030508

KPo i d a w evv dy

Because of the distinct nature of knowledge work, KPOand the dynamics of offshoring knowledge processesare different from the IT/BP type of sourcing seen sofar. K p is about getting

high-end, value-added work done by resources whoseco-location with the end client is not necessary, wherethe effort is people-intensive, and the end product isarrived at through rigorous methodologies. Becausethis type of work requires a high level of judgment,subjective analysis and interpretation, the end resultscan vary from practitioner to practitioner.

tab 1: nau KPo h-v u

The nature of knowledge work is sophisticated andoffshoring such work will require a signicant degreeof partnership and collaboration beyond the processstandardization and compliance seen in the initialwaves of IT outsourcing (ITO) and business processoutsourcing (BPO) thus far.

ca su a

o K wk

As organizations determine which of their critical,high-end and strategic functions can be performedin an offshore environment, a number of factors willinuence their experience with KPO:

n Ease of Process Portability: Just how wellknowledge work can be divided into smaller,manageable segments will determine whatcan be performed and managed in an offshoreenvironment. KPO processes are typically

fragmented across geographies and businessgroups, and are difcult to disengage and clusterfor porting offshore. Success in this activityrequires signicant offshore experience and thedeployment of rigorous methodologies.

n Availability of Skills: It is not just the availabilityof skills at the macroeconomic level but also theavailability of differentiated skills in a speciclocation that is important. Hence, determiningthe availability (and subsequently locating)specic mathematical modeling skills orradiologists is more complex than the ITO/BPO

practice of estimating the talent pool based onthe number of Engineering or English-speakinggraduates. Additionally, as potential destinationeconomies also grow, a number of industries willcompete for the same talent to cater to their owndomestic markets.

n Potential for Economies of Scale: A small sectionof the organizational pyramid performs high-end critical knowledge work and, because of this,KPO generally does not achieve the economiesof scale of ITO and BPO in an offshored oroutsourced environment.

n Legal and Licensing Issues: Traditional barriers toentry employed by professions such as medicine,law and accounting will limit the extent of servicesthat can be offshored. The litigious environmentthat surrounds these professions further limits therisk appetite for using blended global delivery.In some cases, there could even be licensingimplications to processes being offshored.

n Protecting Intellectual Property Rights ( IPR): Manyfunctions and processes, such as certain strategicmarketing ideas or nancial functions, are core tothe organization. For example, some proprietarydatabases, models, and algorithms in equityresearch would be critical to an organization.Similarly, the databases and ndings of a clinicaltrial from a pharmaceutical company would needto be protected. Therefore, protecting IPR wouldbe one of the key considerations in offshoringknowledge functions.

It is people-intensive in that much o KPO work requires insight and

analysis based on skills, experience and judgment The result and the

recommendations are driven by judgment rather than by rule-drivenprocessing

Processes/services are perormed based on skills, domain knowledge

and intellectual capability A process can provide a guideline but not a

deterministic set o rules

The process is complex, requiring many steps It calls or interpretation,

analytical skills, reasoning and the exercise o judgment

It requires people with higher education and/or specialized and dier-

entiated knowledge and skills

KPO is inclusive Unlike BPO, where an entire process is oshored, KPO

usually entails oshoring part o the larger process (eg, fnancial

research and analysis) By its very nature, the team is global


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Ky cu KPo g

n Challenges in Reaching Some Predictions:Current market estimates from various industryresearch organizations as well as some serviceproviders indicate that the KPO industry will

grow at or higher than the BPO growth ratesto reach US$1015 billion by 2010. TPI feelsthat these estimates are highly optimistic andthe growth is not likely to be that rapid for atleast the next ve years. Furthermore, giventhe complexity and the high level of servicefragmentation within the category of KPO, thisgrowth will be limited.

n The Rise o the Captive: For functions closerto the enterprises core activity, the tendencywill be to keep in-house activities that involveintellectual property and sensitive data though

notable exceptions exist. In an offshoremodel, they are more likely to use their ownsubsidiary (or captive) than rely on third-partyoutsourcers for high-end processes. Therefore,the signicance of the captive, or an in-houseoffshore development center of the companybecomes greater.

n Sustained, Steady Demand: While we assertthat the rapid growth estimates should betempered, we are seeing signicant clientinterest in outsourcing knowledge services andanticipate sustained demand. The sector is

both viable and vibrant, and we predict it willgrow steadily. Based on our sourcing advisoryexperience as the market leader, we believethat the demand growth path for KPO serviceswill be similar to that of ITO and BPO. It will befueled by the large rms, such as the Fortune2000 rms that form the bulk of offshoringbuyers in the IT or business process space.Although there will be small and medium-sizedenterprises that will join the KPO bandwagon,we feel that this growth will be limited, giventhe smaller base which this segment has so fardemonstrated.


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Baku

There is a paradigm shift in the way businesses nowthink. Globalization is integral to doing business, andprocess offshoring is at the core of this shift. Workcan now be moved to the worker, rather than thereverse. This fundamental shift in where work can beperformed has been made possible by advances intechnology and international telecommunications.Cost competitiveness and time-to-market havebecome directly linked with outsourcing and evenmore so with offshoring.

This phenomenon has matured to the extent thatoffshoring is no longer simply about obtaining low-cost resources elsewhere; it is now about accessingspecic types of talent and gaining entry points toserve new and broader markets. Global companiesare now incorporating offshoring as part of their

forward-looking strategies rather employing it as aknee-jerk reaction to cost pressures. Encouraged bythe early success of offshoring in the ITO and BPOsectors, companies are increasingly exploring the valueof sending high-end processes offshore, includingones that directly affect their revenue generationcapabilities. This has given rise to much talk about KPO.

tPi ra a Aay my

There has been a signicant amount written aboutKPO. To develop an objective and balanced analysis

of the KPO market, TPI felt it critical to augment itsmarket experience with extensive research. BetweenJanuary and April 2007, TPIs research team based inBangalore conducted:

n Primary and secondary research on 73 serviceproviders

n Primary and secondary research on 45 captivecenters in India performing BPO or KPOactivities

The research covered a signicant number of thelarge service providers with focused KPO services, IT/BPO service providers with known capabilities in KPO

services and captives of global corporations providingKPO services from the offshore center.

In all, TPI determined that 64 service providers (88percent) and 23 captive centers (51 percent) wereperforming KPO activities based upon TPIs denition ofthe KPO market. When combined, the service providersand captive centers included in the research haveresource levels near 18,000 performing KPO services.

tPi df KPo

Aggressive marketing by service providers has todayresulted in KPO becoming a catch-all term for avariety of services. Many services are clubbed undera loose denition of KPO from higher-end BPOwork such as nancial analysis to interpretation ofperformance using dashboards, to truly high-endmodeling, pricing and actuarial services. TPI believesthat it is important to dene the KPO space in a lessfungible manner.

Knowledge process offshoring is about getting high-end, value-added work done by resources whose co-location with the end client is not necessary, wherethe effort is people-intensive, and the end product isarrived at through rigorous methodologies. Becausethis type of work requires a high level of judgment,subjective analysis and interpretation, the end results

can vary from practitioner to practitioner.

The knowledge process offshoring premise involves thefollowing constructs:

KPO work requires insight and analysis based on

skills, experience and judgment. The result and the

recommendations are driven by judgment rather

than by rule-driven processing.

Processes/services are performed based on skills,

domain knowledge and intellectual capability. The

process can provide a guideline but not a

deterministic set of rules.

The process is complex and requires many steps. It

calls for interpretation, analytical skills, reasoning

and the exercise of judgment.

It requires people with higher education and/or

specialized and differentiated knowledge and skills.

KPO is inclusive. Unlike BPO, where an entire

process can be offshored, KPO usually entails

offshoring part of a larger process. By its very

nature, the team is global.

Person andjudgment-driven

Process canprovide a guideline

Process is complex

High level ofskills required

It is inclusivein nature


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sv ta cu

K P o

For this study, we selected services that qualify as KPOper our denition. These include:

There are other services that fall under our denitionof KPO. However, the market for these services is stillnascent and fragmented, and drawing any conclusionsabout them would be premature. Services such as theones below have not been included in our study, sincethey either do not currently pose the market potentialfor TPI or would evoke a different study potentialaltogether (for example, engineering services):

1. Legal process outsourcing

2. Publishing outsourcing

3. Tele-radiology4. Design and Animation Services

5. Engineering Services (not nascent; assumed toemploy about 35,000 people in India;* this will bethe subject of a future study)

equy a aara a Aay

tYPe o ActiVitY eXAmPles

Bu a mak-

ra a

Aay

e a

d sv

Paaua -a uu

n Investment research: equities, derivatives,

credit research, valuation and accounting

n Financial modeling

n Company, industry and sector reports

n Credit risk management

n Normalizing accounting standards

n Valuation o companies

n Tracking o stock markets and analysis

thereo

n Market Analysis: market segmentation,

marketing stimulus and spend optimiza-

tion, need gap analysis, market mapping

n Data mining: mining the Internet,

databases and company websites and

preparation o reports with analysis, data

processing and analysis

n Report preparation: company and sec-

tor reports; editing and ormatting o

reports

n Customer Analytics: customer satisac-

tions surveys, customer and segmenta-

tion, price sensitivity/pricing analysis,

benchmarking

n Very Large Scale Integration (VLSI) design

n Simulations

n Chip design

n Vehicle design support

n Prototype development

n Oshore drug discovery

n Clinical research

* According to the National Association of Software and Service Companies (NASSCOM)/Booz Allen study titled, Globalization of Engineering Services The Next

Frontier for India, August 2006

cu mak dya KPo

ITO and BPO have grown exponentially during the lastdecade or so. During the last two years, growth in boththese sectors has been about 3040 percent.

Many experts believe that this rate of growth will bematched or exceeded by growth in the KPO sector.Several market estimates indicate that the KPO industryis expected to be US$1217 billion by 2010, with Indiaaccounting for about US$1012 billion. However, giventhe nature of KPO and the growth in absolute numbersit has witnessed thus far, we consider these estimatesto be optimistic.

Pay KPo

The KPO industry today consists of captives, pure-play KPO rms and established IT/BPO players that are

expanding their offering to include KPO.

TPIs research revealed that rms in the Banking,Financial Services and insurance industries were earlyadopters of KPO (going back about ve plus years),with many of them performing high-end analyticalwork through their offshore captives. In some cases,while the business processes have been outsourced,research and analytics have remained in-house.

typ KPo Av

KPO services, although nascent, have extended to

various industries such as nancial services, banking,insurance, marketing and research and legal services.

ru P KPo wk

Financial Services65%

Business & MarketIntelligence 26%

Legal, IP &Patent Research

6%

Pharma3%


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aa sv KPo

In the Financial Services domain, from our sample, wefound that approximately 10,000 resources in Indiaare performing KPO work for global nancial servicescompanies. Currently, Financial Services accounts for morethan 60 percent of the KPO work performed in India.

With the exception of a few rms that had signicantheadcounts, we found that most Financial KPO serviceproviders had an average of 500 resources or less.

Financial Services KPO Overview

CaptivesNo. of firms

No. of resources

No. of firms

No. of resources

No. of firms

No. of resources

11

3,500+

10

3,000+

18

3,000

Pure-play firms

Integrated

providers

KP work performed

Source: TPI analysis and interviews

Equity Analysis; Credit Analysis,

Risk Assessment, Actuarial

Analytics, Fund Management,

Financial Data Mining, Insurance

Underwriting and Quantitative

Research Support

Financial Services KPO Headcount Distribution(Number of Firms)

0100

4

11

7

Pure-plays

Integrated

Captives

101200

2

2

0

201500

2

3

1

>500

2

2

3

Source: TPI analysis

Bu a ak a

Business and Market Intelligence KPO amounts to aquarter of the total KPO work being performed in India.

In the Business Intelligence and Market Research KPO

domain, captives are comparatively fewer than inFinancial Services KPO. However, similar to FinancialServices KPO captive centers, most Business Intelligenceand Market Research KPO service providers have lessthan 500 resources.

Business and Market Intelligence KPO Headcount Distribut(Number of Firms)

0100

7

14

6

Pure-plays

Integrated

Captives

101200

3

3

1

201500

1

2

0

>500

1

0

0

Source: TPI analysis

Business and Market Intelligence Knowledge SP Overview

CaptivesNo. of firms

No. of resources

No. of firms

No. of resources

No. of firms

No. of resources

7

500

13

1,600+

20

1,600

Pure-play firms

Integrated

providers

Services offered

Source: TPI analysis and interviews

Data Collection; Data Analysis;

Industry and Company Researc

Reports; Forecasting, Modeling

and Analysis; Output PresentatBusiness Intelligence;

Benchmarking; Surveys and Lib

and Documentation Services


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ca su a KPo

TPI sees two key factors driving continued growth inthe KPO industry:

Changing dynamics in the global workorce The

world is experiencing a major shift in its demographicsacross developed and developing countries. On theone hand, there are countries in the West with largesections of the population reaching retirement age andon the other, there are countries like India with a largeyoung population. This aging workforce in the West isbeing replaced by young populations in the East.

Signifcant saving opportunities As comparedwith ITO or BPO, KPO offers signicant cost savingsopportunities in absolute terms. This is because theaverage cost of a KP resource onsite is signicantlyhigher than the cost of average ITO or BPO resources.Consider the following three examples, which clearlyshow cost benet increases of more than 50 percent insome cases of offshoring:

n A majority of the nancial services modelingjobs that are going to India would correspondto associates with 12 years of experiencewhose Total Annual Compensation (or Cost toCompany) would be approximately US$150,000,which includes US$75,000 a year in salary andapproximately US$75,000 a year in bonus, socialsecurity, and medical benets. However, the fullyloaded cost of a Wall Street or similar resourcein the United States with costs like real estate

in New York City, maintenance, HR and otheradministrative overheads, renting/leasing ofdatabases such as Bloomberg, PCs, and Internetservices included, would add up to US$200,000$225,000. Compared with these costs, mostIndia-based companies charge a total loadedcost of US$50,000 to $60,000 a year for MBAs,Chartered Accountants and Chartered FinancialAnalysts who are equivalent to associates in theUnited States with 12 years of experience.

n In the eld of radiology, it is reported that theUnited States is facing a shortage of radiologists,with 20 percent of vacancies remaining unlled.Additionally, several states have limited thenumber of hours that physicians in training are

permitted to work (e.g., in 1988, the state ofNew York passed the Bell regulations in thisregard). This has helped to create the eld ofTele-radiology. Various data points exist forequivalent U.S. salaries in this eld: according tothe American Association of Medical Colleges,the annual salary for a diagnostic radiologistin the United States ranges from US$325,000and $474,000. According to MD blogspots,the median mid-income for doctors in nuclearmedicine is US$250,000. Salary.com puts themedian salary for radiologists at US$280,000.

n In the automotive sector, several Tier 1 automajors have relocated Research & Development(R&D) and certain elements of design to India.These roles require individuals with mastersdegrees or, preferably, doctoral degrees inaerospace, computer, industrial, mechanical,and software engineering, as well as computerand materials science. Again, in the materialslaboratory, individuals with masters and doctoraldegrees in metallurgy, polymer science, materialsscience, materials processing and math-basedanalysis of materials are required. The workinvolved includes validating microstructural

models, designing high-performance materials,and molecular modeling of nanocomposite/TPO exfoliation and fuel cell membranes. Theseroles are lled in the United States by tenuredprofessionals, many of which fall in the salaryrange of US$200,000.


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Ky a A

g KPo iuy

There are key factors that inuence the KPO decision.Although most of these factors are common acrossKPO as well as ITO and BPO, their relative impact onthe KPO industry is different than in the rst waves ofoffshoring IT-enabled services.

Ease of process portability

Availability of skills

Potential for economies of scale

KPOFactors IT

Legal & licensing issues

Protecting Intellectual Property

Rights (IPR)

BPO

Legend: Indicates impact with less degree of complexity

Indicates impact with higher degree of complexity

KPO

BPO

KPO

BPO

Complexityoffunctions

Complexityoffunctions

Pro

cessPortability

High endCore Functions

Low end non-critical functions

Non-critical high end functions

High endstrategic functions

HIGH

LOW

LOW

HIGH

ea P Paby

Knowledge services form part of the more complexservices of the organization and are fragmented acrossfunctions and industries. As a result, process portability the breaking down of these services and packagingthem into smaller, manageable segments becomesmuch more difcult.

This also suggests the need for a more evolved or sophisticated form of offshoring than in the earlier waves of offshoring.KPO has a signicant need for partnership and collaboration beyond process standardization and compliance.

TPIs experience with clients suggests that KPO processes are typically fragmented across geographies and businessgroups and are difcult to disengage and cluster for porting offshore. Firms require maturity in offshoring as well as ahighly evolved framework to support this move. An example of a detailed process portability framework is TPIs processlocalization methodology. Our methodology breaks down processes into their constituent components and matchespotential locations with these process components based on the unique delivery capability of each of those locations.


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Avaaby sk

For KPO, it is not just the availability of skills at themacro level but the access to dif ferentiated talent thatis important. For example, reading and diagnosingan MRI requires trained radiologists; focusing onthe number of medical graduates that a locationproduces is unlikely to provide a clear picture of speciccapabilities of that location. Contrast this with the lowerend of the BPO services spectrum, where prociency inEnglish (or the language of the country being served)and basic computer literacy are enough to get onestarted. Additionally, knowledge process offshoringrequires understanding of the clients industry segmentand of how the client works as well as a specializededucational background. Attempting to train rawrecruits in order to get them to the desired level istime-consuming, rigorous and expensive.

In addition, many of the traditional destinationcountries for services such as India, Brazil andChina are enjoying great economic growth. As aresult, non-offshore related industries are makingdemands on the same labor pool to service their owndomestic markets. Take the example of India; Indiasgross domestic product (GDP) growth rate is 8.6percent. This is coupled with strong growth rates indomestic industries, such as manufacturing, retail, andpharmaceutical.

The demand for graduates from the domestic marketin addition to the existing demand from offshoreservices taps the same pool that provides the talentfor the knowledge process offshoring sector.

Pa e sa

Unlike in back-ofce processes, such as call centers ortransaction processing, where large-scale operations

numbering in many thousands of people are the norm,KPO will not command large-scale operations. KPOwill therefore not be able to achieve the economies ofscale enjoyed by IT or business process outsourcing.

la a l iu

As KPO begins to penetrate traditional professionssuch as medicine, law, and accounting, the traditionalbarriers to entry that these professions have employedwill limit the extent of services that can be offshored.

For example, one needs to be a board certieddoctor in the United States before one is allowed todiagnose diseases or prescribe medication; a doctor ina location such as India however skilled or certied is precluded by law from offering medical advice inthe United States. In the legal profession, a person isrequired to have a Juris Doctor (J.D.) degree and mustbe admitted to the bar in order to practice law in theUnited States. To obtain this license, a person mustappear for a bar examination in the state that he orshe wishes to practice in. A lawyer licensed to practicein one state may or may not be allowed to practice in

another state.

The litigious environment that surrounds theseprofessions further limits the risk appetite for usingblended global delivery. In some cases, there couldeven be licensing implications to processes beingoffshored. All these issues limit the scope of theservices being offshored.

P iua Ppy r (iPr)

KPO processes are comparatively more central to theorganization than those that are categorized as ITO or

BPO. Due to the value associated with the skills requiredin KPO, the criticality of the roles and functions andthe creation of core intellectual property, the issue ofIPR protection is important. TPI holds the opinion thatorganizations will predominantly establish offshorecaptive centers or seek out highly specialized nicheproviders to address this issue.

Manufacturing

Retail

Pharmaceutical

1214% in the next decade

78% CAGR

Exports growing at 22% y-o-y andturnover at 67% y-o-y


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cu uu iuy

ca ra s P: Currentmarket estimates indicate that the KPO industrywill grow at or higher than the BPO growth rates toreach US$1015 billion by 2010. TPI asserts that theseestimates are highly optimistic:

n The BPO industry is already facing signicantchallenges regarding availability of trainedmanpower, high attrition rates and rising salaries.Given the specialized requirements for KPOresources, these issues will be compounded forKPO rms as they try to scale up.

n Scalability of KPO players As compared with thescale of BPO service providers, KPO rms havenot been able to achieve scale. TPIs researchindicates:

s 80 percent of the nancial services KPO rmshave less than 500 resources

s 40 percent of the nancial service KPO rmshave less than 100 resources

n Most KPO services are high-end, value-addedservices. They are also fragmented acrossdifferent geographies and business units in anorganization. It is difcult to parse and clusterthese processes to be offshored. This limits thescale and the scope of the services that can beoffshored. The complexity of these services also

makes the growth process slower.

n Like the ITO or BPO industry, growth in the KPOspace is more likely to come from the largerms, for example, the Fortune 2000 rms.Traditionally, these have provided opportunitiesto these industries. The small- and medium-sizedenterprises typically lack the scale as well as thenumbers to provide the signicant impetus to theKPO industry.

t r capv: As processes becomemore complex and integral to the basic raison dtreof the enterprise, there is less likelihood of thembeing outsourced. Although notable exceptions exist,companies often prefer to keep processes that includecore intellectual property and sensitive data in-house.In an offshore model, they are more likely to use theirown subsidiary (or captive) than rely on third-partyoutsourcers for high-end processes.

For example, in the nancial services area, TPI researchnds that there are a signicant number of captives inthe knowledge services domain. We nd that manybanking and nancial services institutions prefer to buildthe knowledge services capabilities in their existing

back-ofce operations in offshore locations such asIndia. Interestingly, these captives were originally set upto help with lower-end processes but are increasinglyfocusing on areas of greater value to their parent rms.Of the captives we researched for this study, we foundthat about 10 percent of the resources are engaged inknowledge-based high-end work.

Below are examples of companies across variousindustries that have captive operations or haveoutsourced high-end knowledge services to serviceproviders in India:

Overall, we see growing client interest in KPO. Thesector is viable, vibrant and likely to grow. It also faceschallenges, which are in some ways similar to thosefaced by the ITO and BPO industries. However, KPO willcontinue to hold client attention and will gain througha steady growth rate.

Company Functions Business/Delivery M

A large European financialservices company

Large global diversifiedbusiness group

One of the largest bankinggroups in the world

Analytics

Credit AnalyticsTreasury

Credit Analytics

Captive and outsource

Historically captive butending toward outsouing

Captive

Global financial servicesfirm

U.S.-based large globalfinancial services firm

A large Europe-based bank

Equity ResearchInvestment BankingAnalysis

Equity Research

Mortgage AnalyticsCollateral SecuritiesAnalytics

Captive



Large U.S. commercialbanking organization

European media organiza-tion

Large global travel &leisure company

Business Intelligence andbenchmarking

Customer Satisfactionsurveys

Statistical Analysis forCustomer, Marketing andRevenue Management

Outsourced

Outsourced

A global software manu-facturer

Patent research Outsourced

Outsourced

1


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Appx 1: dp g dv

Parameters Description

Ease of processportability

Availability of skills

Potential for econo-mies of scale

The ability to break down work into its constituent parts and the ability to transportthe independent parts of work. This is critical to analyzing how and what extent aservice or process does not require being either co-located with the parent or be onthe same shore as the parent.

Availability of the right kind of differentiated skills is a key factor in making a KPOdecision.

The larger the scale of services, the more efficient they become in terms of their useof infrastructure and fixed costs such as real estate. The very success of the IT andBPO industry is witness to the fact that these economies of scale have beenachieved.

Legal & licensingissues

Protecting IntellectualProperty Rights (IPR)

Due to legal restrictions, not all services can be offshored. This is the case with manyof the high-end critical services in an organization. Also, some services havelicensing requirements that make them difficult to be offshored.

Since the functions and activities that are clubbed under KPO are core to the

organization, protection of IPR is a critical issue.

1

2

3

4

5

1


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ABoUt the AUthors

Indy Banerjee, Director, TPI

Mr. Banerjee advises TPIs clients on aspects of their Global Service Delivery (GSD). Indy has extensive experience

advising clients on their sourcing strategy globally to low-cost locations with a specic focus on India. He providesstrong strategy, operational, transition and quality experience and has an extensive network of Indian service providers.Indys practical experience includes a broad spectrum of exposure in various functions, including business processoutsourcing, IT services and infrastructure consulting.

Prior to joining TPI, Indy worked for Fortune 10 organizations in several leadership roles spanning global offshorestrategy development, opportunity identication and transition, enterprise program management, offshore servicedelivery and Six Sigma.

Jui Narendran, Research Manager, TPI

Ms. Narendran is a Research Manager with TPIs Global Service Delivery (GSD). Based in Bangalore, India, Jui and herteam provide business and market intelligence to TPIs clients in three primary areas:

1. Data and analysis on the service provider market place

2. Research and analysis on various offshore destinations around the globe

3. Industry-level analysis and inputs, especially those related to India

Jui and her team offer fact-based, relevant and insightful knowledge to clients to help them make the most effective,informed sourcing decisions for their unique needs.

Prior to TPI, Jui has had a wide-ranging background in market and business research, spanning more than 10 years. Herextensive experience in the research industry spans both qualitative and quantitative research in multiple industries andsectors.

Jui has a Bachelors degree in Psychology from the University of Pune and a Masters degree in Social Work from the TataInstitute of Social Sciences, Mumbai.

Rukmini Priyadarshini, Senior Research Analyst, TPI

Rukmini (Priya) Priyadarshini is part of TPIs research group that has strong tie-ins with all stages of the sourcing lifecycle.Priya provides analyses and valuable insights into the factors and trends that impact sourcing decisions and themanagement of sourcing relationships. She contributes to TPIs research capabilities and offshore knowledge base forIndia and other offshore locations. Prior to TPI, Priya was a business correspondent with an IT and outsourcing industryfocus for The Hindu Business Line, a leading Indian business daily.

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looKing or A strAtegic PArtner?

TPIs Global Service Delivery specialists can help guide your organization through the journey of making informeddecisions regarding the strategic use of global, or offshore, resources. With our strong representation in India, SoutheastAsia and Europe, we help ensure that your business objectives inform and align with your global sourcing strategies.

Let TPIs KPO experts help you achieve your organizational goals through objective advice, knowledge of your industryand experience with complex arrangements.

Contact Indy Banerjee, Director, + 91 80 51518538 or [email protected].

ABoUt tPi

TPI, a unit of Information Services Group, Inc. (ISG) (NASDAQ:III) is the founder and innovator of the sourcing advisoryindustry, and the largest sourcing advisory rm in the world. We are expert at a broad range of business supportfunctions and related research methodologies. Utilizing deep functional domain expertise and extensive practicalexperience, TPIs accomplished industry experts collaborate with organizations to help them advance their businessoperations through the best combination of business process improvement, shared services, outsourcing andoffshoring. For additional information, visit www.tpi.net.

Aa

Nigel JonesManager, Business Development+1 650 384 5405

[email protected]

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Denise ColganMarketing Manager+44 0 1737 371523

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Aa Paf

Arno FranzPartner & Managing Director, Asia Paci+61 (0) 2 9006 1610

[email protected]

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