Knowledge Process Outsourcing

Contact An Agent

Knowledge-process outsourcing
Banking & Finance
Written by Wilma Inventor Miranda / Free Enterprise
Thursday, 10 December 2009 19:13

Everest Research Institute

FINANCE and accounting outsourcing globally has gradually been evolving into more high-level services. Although the demand for routine work such as transaction processing, bookkeeping, financial reporting and other finance and accounting (F&A) services is still high, clients are now willing to outsource to third-party providers functions that were usually performed by their people. One reason for this is because of the lack of people with enough technical knowledge or experience on these areas.

The recent “technical” and “talents” flight for abroad have made it more difficult for companies to look for new talents or to replace the ones who had resigned for better pay abroad.

This kind of service is popularly known as “knowledge process” outsourcing, or KPO. It is more knowledge-intensive and requires significant domain expertise. This requires specialized training and, thus, the persons involved should be highly educated or experienced/trained on a particular expertise or skill.

In knowledge-process services, business expertise is provided by a third-party provider. It is a shift from standardized processes to advanced analytical thinking, technical skills and a decisive judgment based on the experience of the provider.

In the Philippines, most of the backroom or F&A outsourcing companies are performing services to clients which are more of routine in nature and do not require high-level expertise. This is because KPO needs people who are trained on special-knowledge services. Another reason is if these companies do accept these kinds of services, there is the problem of manpower turnover because it is not easy to find such people with specialized skills.

But this can be avoided if the people at the helm of leadership have this expertise so that it will be easier to train people for the pool to replace resignations/separated employees.

One such company was recently set up in Makati. The stockholders themselves are former partners and executives of top audit and outsourcing firms and have high-level expertise on KPO services such as due diligence, operations/productivity/financial reviews, internal audit, risk management, project-development needs (stepladder management) and such other similar services.

KPO services are, however, not just confined to these areas. Other KPO services may include market research, legal research services, etc. The fact that the owners themselves are experts on these services they offer creates greater confidence on the part of both the client and the provider so that agreed deliverables can be complied with and the problem of the lack of manpower pool due to requirement for high-level knowledge expertise can be minimized or altogether avoided.

Everest Research Institute recently released its 2010 predictions, and in the area of F&A services the predictions look rosy with a robust pipeline despite the tough economy in 2009. For value proposition and contract characteristics, they see an increase in demand for analytics and other specialized F&A services, regulatory compliance, internal audit and such other high-level knowledge services.

Supplier landscape in 2010 will show major contenders challenging the dominance of the leaders. These challenges from major contenders might bring about market differentiators in terms of innovative solutions such as platform-based solutions, specialized process offerings and industry-specific offerings.

It is going to be an exciting year ahead with a big potential market outside of the Philippines since Everest Research Institute 2010 predictions foresee a revival in the growth of offshoring, especially from Continental Europe, the United States and the United Kingdom. And the Philippines is still one of the top preferred locations. There is, indeed, a big room for everyone even if the new players will come in and the major contenders will try to play a dominant role in the market.

And knowledge outsourcing is riding on the bandwagon of this robust growth they foresee in 2010.