“I think there is a world market for about five computers.” Thus predicted (allegedly) Thomas J. Watson, then chairman of IBM.    

The technology market is no less swamped with vapid (and sometimes plain wrong) predictions now than it was then. However, as all our readers and members can appreciate, the NOA would never make spurious claims or predictions that are no less than 100 per cent accurate. On that note, we’ve got a couple of ideas of what might (or will) happen in 2008: 

2008 will see the looming credit crisis lead to an upturn in outsourcing. The downturn in the economy and possible recession will see increasing numbers of C suite executives view technology and outsourcing as solutions to the need to slashoverheads and minimise any negative impact on the bottom line.  

During 2008 organisations will start to look beyond India for offshore provision due to the climbing attrition rate and rising Indian salaries. Organisations will look for alternatives to India that offer suitable mixtures that enable closer proximity/cultural awareness along with the right pricing options.  

Recent NOA research suggests that many organisations have had problems with offshore captive operations. They have underestimated costs, time and effort required, particularly in acquiring the right people and keeping them. As labour costs rise and the challenge of virtualisation (especially for ITO, see below) through 2008 it will become harder and harder for captives to compete with true outsourced suppliers. 

In 2008 we will see the actual delivery of virtualisation, grid computing and thin client services, which may initially reduce the number of ITO contracts as internal IT groups look to this technology to solve cost and delivery problems. However, the transition from client server applications to “virtual” may be more problematic and costly than expected, whereas outsourcing suppliers have the expertise, skills, models and tools that will allow them to offer these services effectively and cheaply.   

Outsourcing really is an ever changing market, from HR to admin to call centres there is nothing that can’t be outsourced. If it makes business processes cheaper and more effective, then why not?

However, it would seem that most companies, though talking about knowledge processing outsourcing (KPO), actually have no idea what it is. Everyone knows what business process outsourcing (BPO) is, so why is it so hard for companies to figure out what KPO is?

BPO has been a popular outsourcing process for quite some time now, therefore, as with all business functions, it has to evolve. The most commonly used definition of KPO is the outsourcing of a process that will have a direct impact on high level processes within the businesses – domain level processes and business expertise that will add value to a business.
For example: Pharmaceutical companies have been developing drug research using KPO for years and through this have developed products at a much faster pace and at a much cheaper rate. Market research uses KPO by outsourcing areas where technology can significantly improve the research process.

Similarly smaller firms can also benefit from KPO as they are cost effective and remain within the budget constraints faced by smaller organisations. In effect this reduces the gap between the small and large - another leveling effect similar to the internet.

A less common definition of KPO is transformational business process outsourcing. This involves a company outsourcing a function in order to utilise the supplier’s specialised knowledge to improve it. The difference here is instead of being a core process – as above – this could be any BPO that the end user wants the supplier to transform.

With so many companies unaware as to what KPO is, a single common definition would be helpful. Transformational BPO is actually an entity in itself, so the outsourcing of core functions like R&D is becoming established as the definition of KPO. Now all companies need to go and do is to practice it!