The road to KPO

Money is in the details. In the world of business process outsourcing (BPO), a new opportunity is rising to make even more revenues by going beyond offering traditional voice and e-mail-based customer support services.

It’s called KPO (knowledge process outsourcing), a higher level of BPO where every bit of detail based on data gathered is expertly converted into information or knowledge for companies engaged in pharmaceuticals, aerospace, engineering, biotechnology, finance and other industries.

By 2010, industry analysts expect the global KPO market to be worth anywhere from $12 billion to $17 billion. India, having a solid track record in the global BPO business, is effortlessly moving toward KPO. Can the Philippines, which is also a viable provider of BPO services, do the same and challenge India for a piece of the KPO export pie?

An Indian national who formed his own BPO company in the country believes so. Mohan Kulkarni, president and CEO of FinSource, a global provider of end-to-end BPO services for leading international financial services firms, believes KPO is a new avenue for growth and it’s exactly where he wants to take FinSource.

"I want to move to KPO, which is a much higher level of BPO. The shift is already taking place in some markets but not so much here yet where I want to see it happening in a big way," Kulkarni says.

To succeed in this field, providers must truly have an in-depth knowledge of how to do certain things or processes for particular industries. Kulkarni’s expertise in all aspects of BPO for the financial services sector is the result of his 23-year career in banking both here and abroad.

Kulkarni formed FinSource in 2003 after holding various top management and leadership positions in distinguished financial institutions, including Citibank, HSBC, Solidbank, and Arab National Bank. Doing so allowed him to offer local banks his expertise to help them enhance their profitability by managing their processes and costs well.

With only six staffers in 2003, Kulkarni grew FinSource to 110 people last August. At this stage, he has his eyes set on the offshore market where possibilities to do various types of KPO seem endless.

"FinSource has grown big and to do beyond what we are doing we needed more investments. The real business is not serving local banks but selling our services to foreign banks, particularly in the English-speaking countries. To do that we need to have global reach so we were looking to team up with a large partner," says Kulkarni.

He did not have to wait long. In November 2005, Nasdaq-listed TeleTech Holdings Inc., a global business service provider of full range, front-to-back office outsourced solutions, acquired FinSource to expand TeleTech’s global capability in the financial services industry and complement its present mortgage processing offer.

"Our needs matched. Now as a TeleTech company, FinSource opens itself to new global BPO opportunities. We can approach TeleTech customers and tell them about our services and reach out to banks abroad where we can offer our cost advantage," Kulkarni says.

KPO opportunities

KPO projects are so diverse they can range from scientific and business research, clinical studies and other medical processes, to patent filing and legal and insurance claims processing, to name a few. This is why those who go into KPO require not just college graduates with good aptitude in English, but professionals such as doctors, engineers, lawyers, MBA holders and other experts – resources that Kulkarni knows are not exactly hard to find in the Philippines.

Because it’s a high-level work, KPO billing rates are also higher than usual BPO work by at least 50 percent to 100 percent. That and the fact that the service can be rendered in the Philippines at least 30 percent cheaper make it an even more attractive business endeavor.

FinSource will most likely test the KPO waters beginning with claim settlement processing.

"In the US they pay high salaries for that type of work which we can do here at less cost. FinSource can get into legal, book publishing, medical and other fields. We just need to hire researchers, strategists, and lawyers who are paid a third of what their American counterparts get. So why should they recruit a researcher from New York, for example, when the same work can be done here? After all, we can also get to the Internet," Kulkarni says.

In short, his KPO business model has something similar to what FinSource offered local banks: the same quality work for less the cost.

In addition, Kulkarni is also looking at nearby markets like Singapore, Japan and Hong Kong where the Philippines again has cost advantages to offer.

Meanwhile, Kulkarni continues to see the Philippines growing in voice-based BPO services but also gradually competing in KPO. As this unfolds, he expects FinSource to reach 500 people in no time, armed with domain knowledge and expertise needed for the projects.

"You should have domain knowledge and expertise. If you don’t have those then you don’t have credibility and you will lose," Kulkarni says.