Business Case Studies, Executive Interviews, Sreenivasan Ramakrishnan on Knowledge Process Outsourcing

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Executive Interviews: Interview with Sreenivasan Ramakrishnan on Knowledge Process Outsourcing
May 2006 - By Dr. Nagendra V Chowdary

Sreenivasan Ramakrishnan
Co-founder and CEO, Marketics

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  • As per a NASSCOM survey, the Knowledge Process Outsourcing (KPO) industry will grow 45% by 2010. The global KPO pie in 2010 will be around $17 bn, of which $12 bn (70%) will be outsourced to India.What are the factors behind this sudden interest in KPOs in India?
    KPO is a very broad term. Hence, before I answer this question, let me quickly explain what Marketics does. Marketics is amarketing analytics company that works with global marketers and converts their "under-utilized data into actionable insight". In a lot of cases, this is not even done in-house by clients and it is a case of an entirely new solution. Hence, there is no "outsourcing" i.e., replacing jobs in what we do.

    Marketics helps the best global marketers increase their marketing effectiveness and ROI. It's about driving top-line revenue growth through identifying opportunities via analytics. It's not about 'cost-cutting' at all This is a very critical parameter in a KPO.

    The factors that have contributed to the growth of KPO is domain expertise that is available in India in plenty. These refer to business domains likemarketing, finance, supply chain, etc., as well as in specific, industries like CPG, telecom, financial services, retail, etc.

    The growth of domain expertise can be attributed to two reasons:

  1. Well trained Indian managers coming out of topMNCswho have set-up shop in India
  2. Managers who have gained experience in servicing American and European firms in the IT/BPO context. These managers "speak the same language" as their clients, thereby driving comfort. We are not talking bout cheap labor alone.

    Take the case ofMarketics.Marketics has over 50 MBAs from India's top business schools and marketing firms. When these professionals interact with their clients (who are leading global marketers) they "speak the same language"   this drives comfort leading to better solutioning. Our managers have had relevant experience as line managers managing a P&L and that experience is valuable when we offer business solutions to our clients.

  • As a value proposition, what's the difference between KPO and BPO? Does the difference in any way indicate low-end and high-end nature of the jobs outsourced?
    KPO is not a sequel to BPO but a radical discontinuity.

    The success of BusinessProcessOutsourcing (BPO) has been largely driven by cheaper costs offshore. In some cases, to give due credit, BPO has also resulted in process efficiencies leading to benefits across the enterprise. However,moving jobs to a cheaper offshore location and its immediate bottomline impact is the prime benefit for a global corporation to embrace BPO.

    KPO, on the other hand, involves offshoring of knowledge-intensive business process that require significant domain expertise in addition to process and quality expertise. This is not necessarily outsourcing as a lot of this would fall in the 'opportunity maximization' land vs. 'cost-cutting'.

    The KPO revolution is fast catching up and is on its way to cross the BPO in India as well as globally.Moreover, with countries like Ukraine, Hungary, Belgium, the Czech Republic and the Philippines offering BPO services at a lower rate, it'll be in KPO that Indians will be leading the world.

    Compared to BPO, KPOdelivers higher-value to organizations, thereby enhancing BPO's traditional cost-quality paradigm. The core of KPO is to create value for the clients by providing relevant business expertise in addition to process expertise. Also, KPO companies work with the business leaders in their client organizations not IT or outsourcing managers. Domain is key.

    The softer benefits for a KPOservice provider like Marketics are many:

  1. Professionals get to do great work for great clients.Work is challenging and domain based unlike the repetitive process/ transaction-based BPO work.
  2. Based on nature of work, such firms can attract and retain top talent. Marketics consistently attracts and retainsmarketing and analytical talent in the country from the best business schools, marketing firms and statistical institutes.
  3. Highly satisfied employees.As KPOdoes not transpire into a "factory" situation employers can be far more creative with the workplace and the work culture:
  4. > Lack of shifts

    > Flexi-timing

    > Flatter organization structures

  5. Negligible attrition and healthy work-life balance.

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