Growth in Knowledge Services

Wednesday, 22 August 2007

In the last two years, there has been a significant increase in the level of interest in the knowledge services space - a large number of entrepreneurs starting KPO outfits; several large multi-service BPOs (like WNS, EXLService, Infosys BPO) adding knowledge services to their offerings; VC/PE firms investing in this space and proliferation of vendors in every KPO niche. Helion Venture Partners recently invested in Amba Research, an investment research BPO Merrill Lynch acquired a minority stake in Copal Partners, a research and analytics BPO for $11 million Legal process outsourcing provider, Pangea3 raised $7 million in series C funding from Sequoia Capital India Quattro BPO Solutions invested in Annik Solutions, a market Research BPO, and in Scope e-knowledge a research and IP services provider Barings Private Equity Partners invested in Integra, a Pondicherry-based publishing BPO In the last two years, there has been a significant increase in the level of interest in the knowledge services space - a large number of entrepreneurs starting KPO outfits; several large multi-service BPOs (like WNS, EXLService, Infosys BPO) adding knowledge services to their offerings; VC/PE firms investing in this space and proliferation of vendors in every KPO niche. Knowledge and Process In a recent conference organized by the Economic Times in Bangalore, there was an interesting discussion on what differentiates a knowledge service from a typical 'BPO service'. Almost every service requires some amount of knowledge necessary to do the job. However, the extent of knowledge varies from service to service. Services such as call centers, data entry, data processing, etc require process expertise of the vendor while knowledge services require specialized knowledge skills and qualified professionals like PhDs, Lawyers, Doctors and Engineers. These services tend to be more qualitative or judgment based. For instance, a legal outsourcing firm employs lawyers; a pharma R&D outsourcing company recruits doctors and PhDs and an engineering outsourcing firm requires engineers with CAD/CAM expertise. The Indian BPO industry is a relatively matured industry compared to the KPO sector. Thus the traditional BPO jobs have now reached a maturity and are 'process-ized'. Of course, BPO services require relatively low-level skills while for KPO services, knowledge and professional education is the key. Specialization within specialization Significant segments within the knowledge services space currently are: Legal Services, Premedia, Publishing, Research & Analytics, Media Services and Engineering design. Numerous new opportunities will lead to the creation of a large number of new niches and niche service providers. While knowledge services is still in a growth stage, we are likely to see a much wider range of new services, along with very focused and specialized vendors. For instance, Legal transcription and litigation support were among the initial services to be offshored to India in the legal services space. However, over time, vendors in this space have developed additional capabilities and are offering specialized services within the legal services space. Some examples: Tusker group (Document review), NewGalexy (Contract drafting and management), SDD Global (Litigation support for media services). Similarly, vendors in other segments are also looking at specialization: MarketRx (Analytics for pharma marketing), Fractal Analytics, Copal Partners (Analytics for banking sector). A significantly large number of firms are moving rapidly towards specialization within their chosen niches. This trend is likely to gain traction in the next two years.

 

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