Tuesday, December 25, 2007

Knowledge process outsourcing

That old saying, “If you pay peanuts, you only attract monkeys”, has proved particularly apt in the age of outsourcing. While 70 percent of the worlds outsourced tasks landed in India, the vast majority of these assignments tended to cluster at the bottom of the knowledge pyramid demanding hard work, concentration, patience, but not too much by way of brain work. The demographics of work outsourced to India changed sharply in 2005 as the industry here acquired both the confidence and the competence to bid and win more challenging tasks, which called for subject knowledge and domain expertise.

Bigger contract sizes

“Go up the value chain!” was the advice of the industry experts – and the Indian BPO players did just that, trapping in to the well springs of desi expertise in a wide array of disciplines to make to foreign customers a godfather-like offer they could not refuse.

Leading players like accenture, covansys, mphasis and symphony cannily reinvented themselves to address the new niche known as KPO or knowledge process outsourcing. Some like office tiger, which specialized in providing a combination of research and analytics as well as a wide spectrum of value added financial and transaction-processing services, quickly ramped up their Indian operations to better ride the KPO wave.

Average contract sizes, which rarely exceeded $2 million swiftly shot up to the $5 to 10 million bracket as Indian IT-enabled service players increasingly, displayed their knowledge-intensive and domain-specific skills.

Chennai and Bangalore emerged as the leading KPO destination and a variety of new domain niches soon put India on the global map. The global aircraft industry annually outsourced almost $1billion out of a total development budget of $2.8 billion. The leading Indian aeronautical development agency, HAL, soon counted both Boeing and airbus among its clients while TCS and Infosys led the march towards outsourced aircraft engineering services.

The similarity of the legal systems in India, the U.K and the U.S., created another huge opportunity which players like Datamatics, WNS and Evalueserve, were quick to seize, as third party BPO operations. When GE shed its captive BPO in India. It also handed on a platter vast expertise in legal outsourcing, which it had developed for over a decade.

The entire arena of the product engineering services (PES) was again an opportunity for India that companies like Wipro were quick to capture. By end 2005 almost a third of its revenue came from its 120-150 clients in the product-engineering arena. However, much of Indian product development ingenuity was displayed in the captive R&D centers of leading engineering players rather than in outsourced outfits.

Many new opportunities

Meanwhile every seems to throw up a new knowledge outsourcing opportunity and make of the “experts” came from non-traditional backgrounds. Growing stars, was offering personalized tuition Service Company, growing stars, was offering personalized tuition services to American children who seamlessly interacted with dozens of schoolteachers in kerala.

Their tutors, many of them full time teachers, had to get up at 4 am so that they could go online with their pupils on another continent, to help them with their evening studies and homework.

One emerging niche in the high-end of the KPO business was animation and computer generated imaging (CGI)

As the old frame-by-frame hand tooled animation gave way, worldwide, to new computerized 2-D and 3-D technology, Indian players cannily encashed a combo of artistic talent and computer graphics know-how to attract small chunks of the outsourced animation business.

The global ‘cake’ was estimated to be worth $55 billion during 2005,with Indian companies taking about $285 million. But industry estimates saw scope to double this share by 2009.

The mumbai based crest animation, clinched deals in 2005 to co-produce and o-finance three mainstream animated feature films with lion gate entertainment, emerging as one among a handful of studious that could handle both 2-D and 3-D. in the south, pentamedia was player which carved out its own space in 3-D graphics business.

The Indian end of based-in-Hollywood animation studios like rhythm & hues also played increasingly important parts in the making of major animated films by studios like Disney and pixar (now merged into one company).

It deployed over 50 artists for nearly 2 years to help in the computer effects that went in to “the chronicles of nornia”, one of Disney’s biggest box office successes last year.

The year 2005 also saw the establishment of the countries first-ever special economic zone (SEZ) for export only work in animation, within the KINFRA film and video park in thiruvananthapuam.

The opportunities for such resourceful knowledge outsourcing seemed limitless and when NASSCOM suggested that within 5 years, $12 billion worth, that is 70 percent of the worlds $17 billion KPO business, would come to India like an achievable target.


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