Monday, November 7, 2011

Emerging locations for KPO delivery

MELBOURNE, AUSTRALIA: India has been at the forefront of the development of the knowledge process outsourcing (KPO) industry and will remain so for the foreseeable future. However, in recent years a number of other viable KPO sourcing hubs have emerged in the Asia-Pacific region, according to Ovum.

In a new report, the independent technology analyst firm finds that these new KPO delivery locations, including China, the Philippines and Sri Lanka, are unlikely to challenge India's dominant position in the market, but they have enabled many vendors to pursue a multi-shore strategy.

Ed Thomas, Ovum analyst and author of the report, said, “Being able to deliver services from multiple locations means providers can offer existing clients greater flexibility and minimize the risks associated with having all their operations in one facility, while at the same time tapping into fresh labour pools.”

The KPO industry is maturing and the range of services being provided has expanded as the market has developed. From its initial beginnings in research and analytics, the definition of KPO currently includes a variety of services, such as legal process outsourcing and clinical trial management, among others.

On the latter topic, Ed Thomas said: “A major challenge facing life sciences companies is the growing cost of R&D and, as a result, a growing number of pharma companies are turning to outsourcing and offshoring as ways of reducing these costs. China is an attractive location for companies that run and manage all phases of the clinical trial process, as it offers a significant pool of potential patients in an important emerging market.”

Along with China, the Philippines is also becoming an increasingly important player in the KPO market. It has started to carve out a niche for itself in a number of key areas, including healthcare outsourcing (providing industry-specific services to hospitals and healthcare providers). This market is expected to grow significantly during the next few years, with a notable increase in demand coming from the US as a result of the recent reforms in healthcare regulations.

Sri Lanka has also focused on developing skills around specific service lines. For example, the country has a significant number of qualified accountants, capable of providing the kind of high-end complex tasks associated with service areas such as equity and credit research.

The recent emergence of countries such as China, the Philippines and Sri Lanka as viable locations for KPO delivery has been a positive development for vendors, as it has enabled them to begin offering a blend of offshore and nearshore delivery while also giving them access to sizable and previously untapped talent pools.

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