XBRL, or the eXtensible Business Reporting Language is a new language and technology for the representation and transmission of business and financial data. It is an XML (eXtensible Markup Language) based standard governed by XBRL International Incorporated, a non-profit consortium of 450 organisations, regulators, government agencies and software companies. Members of XBRL International include companies like IBM, Microsoft, Morgan Stanley and Deloitte & Touche. XBRL has evolved in response to the need for a standardized computer representation of financial and business data, which can be used globally. Experts believe that it will soon become the de-facto standard for corporate reporting.

The philosophy behind XBRL is to create a world-wide standard for the preparation and dissemination of financial statements that can be read automatically by computers. The aim is to avoid the repeated re-keying, re-formatting and translation of financial data from one format to another. Hitherto, each provider of financial information has chosen its own format to present the data to users. For example, the Economic Times publishes financial data of companies in a way that is different from the way that ICICI-Direct, an online brokerage does. Further, there are also differences between the formats used by companies in the way they prepare their financial statements. Each user of this information would have to re-key this data into its own database in order to be able to use it.

Read more: eXtensible Business Reporting Language - A report

"Hey Ajit!!! I've just finished my MBA and am joining a really exciting industry. Any guesses?"
"Great Sachin! You must be joining a bank. No? May be a FMCG selling soaps or wait, is it one of the high paying IT jobs?"
"No. Do you think its still as exciting there? I am joining the KPO industry."
"KPO??? What is KPO? I've heard only of BPO."
"KPO is Knowledge Process Outsourcing"
"Outsourcing??? Are you sure? After an MBA?? How are you going to manage the late night shifts? I'm sure you'll be missing all the evening parties."
"KPO is not about call centers and customer service helpdesks with masked names. It is about high-end research and it is a specialist's job unlike BPO. And what's even more exciting is that this is not an industry exclusively for the MBAs. It is a promising industry for doctors, engineers, lawyers, biotechnologists, CAs and numerous other professionals."

Sachin is just one of the projected 250000 professionals who would be a part of the $12bn KPO industry in the year 2010.

KPO involves outsourcing of business processes that require domain expertise of MBA's, engineers, doctors, lawyers, accountants and other professionals. KPO unlike BPO requires moving away from simply executing standardized routine processes to carrying out processes that demand advanced information search, analytical, interpretation and technical skills as well as some amount of judgment and decision making.

Why KPO, suddenly?

The differentiation of the services and movement to KPO is important for survival of the outsourcing industry in India as BPO has become highly commoditized and the very low end work will soon shift to destinations like Bangladesh and the Philippines. Also, the billing rates in KPO are 50 per cent to 100 per cent higher than in BPO, closer to what software services companies charge for IT Outsourcing. Further, KPO has a lower attrition rate - less than 20 per cent compared to over 50 per cent in BPOs. This is because teams usually work normal hours and don't have to answer irate callers. Above all, the market for KPO is big and growing. The companies in USA and Europe are keen on outsourcing their knowledge processes to offshore destinations like India. Apart from the obvious cost savings, KPO users typically save on time and also have greater access to a variety of skills. In many cases, providers also offer multi-lingual research capabilities. The global KPO market is projected at $17bn in 2010. Now who wouldn't be interested in having a share in the KPO pie?

The Industry- who does what?

The biggest customers of KPO services would include market research and consulting firms, investment banks and financial service institutions, media, publishing and database firms, pharmaceutical and biotechnology companies and corporate planning departments of large Fortune 500 companies. Several global players such as McKinsey, Goldman Sachs, Reuters, IMS Health, JP Morgan, AC Nielsen and the WPP group are already using India as a remote base for knowledge-intensive processes. Even in the R&D area, contract research organizations are being widely used by pharmaceutical companies. Destinations such as India offer significant cost advantages - often as much as 40% to 60%. Recently, companies such as AstraZeneca and Glaxo-SmithKline have set up offshore drug discovery centers at low-cost destinations for R&D work.

The typical KPO functions that these companies would be providing are intellectual property or patent research, patent filing, R&D in pharmaceuticals and biotechnology, data mining, database creation, and a range of analytical services such as equity research, competitive intelligence, industry reports, insurance underwriting, risk assessment and financial modeling. The most exciting part of the industry is that the whole range of these high-end services would be provided from a remote location using the power of information technology. KPO thus relies on high degree of human capital and IT enablement unlike the low human capital quality and low IT enablement that drove the BPO revolution.

Is the road to KPO easy?

In spite of the promising opportunities that the KPO industry offers, executing KPO projects is not easy and requires a more professional culture than what is found in BPOs. Processes executed within the KPO domain require higher quality standards because the stakes for the clients are high. Furthermore, the clients are likely to have apprehension about the quality of the services delivered (especially by low-cost destinations like India) and these may be difficult to alleviate.

Being a new industry with a diverse workforce, the key challenge in the management of a KPO firm as perceived by most leaders in the KPO industry is the identification of performance criteria - setting the right expectations with the client as well as its own professionals, continuous assessment and monitoring, constructive feedback, appropriate coaching and mentoring as well as identification of the right career paths for the diverse profile of its professionals.

However, these factors will not impede the growth of the KPO industry. In fact, the protectionist lobby and their anti-BPO drive in the USA and the UK has helped global off-shoring and, in particular, global KPO by providing free publicity. Evalueserve estimates show that between June 1, 2002 and May 31, 2004, India Inc. alone received more than USD 89 million in free publicity from more than 1,980 distinct articles in newspapers and magazines and over 210,000 distinct references and "threads" in the U.S.A and U.K.

As a country, India needs to work much harder for more companies to flow into the KPO pool. A few companies abroad are still skeptical about outsourcing high-end services for varied reasons such as data security issues, professionalism and quality concerns, unstable political and regulatory climate. Enacting stringent data security laws, ensuring high-class transportation, communication and power infrastructure uniformly through out the country are some of the government initiatives that would aid the growth of this industry.

What does KPO offer to the B-School graduates?

In a KPO firm a typical operations manager or business manager draws between 6-8 lakh rupees per annum. High-end recruits from premier institutes command between 8-10 lakh rupees. However, pay is just one of the benefits that the industry offers to its high-end employees.

There is the benefit of global exposure and the opportunity to work in a cross-cultural environment. B-School graduates who aspire to work in an industry as high-end and niche as an investment bank which has a very limited intake from the b-schools in India, can now get the required experience and exposure by doing high end research jobs in any of the captive back offices of the I-Banks in Mumbai or Bangalore or a third party KPO outfit servicing an I-bank. This would be an excellent stepping-stone for their future careers with those I-banks itself. The same goes for the global pharmaceutical and biotech companies, international law firms and consultancy companies.

The career path the industry promises to offer is very steep and growth opportunities are projected to be even better than what the IT industry in India offered a decade back. However, given the small managerial workforce in the industry currently and the projected growth in the next 5-6 years, the managers in the KPO industry have a challenging task ahead of them. If they manage the diverse workforce well and differentiate the services they offer from other KPO locations, they can expect big returns.

Based on the table above the KPO Industry has a big task on hand in positioning itself properly in the minds of the student community. The sooner the concept of KPO differentiates itself from BPO in the student's mind, the easier it is going to be for the KPO companies to gain acceptability and thus attract good managers who can steer the industry's growth.

Is KPO the latest bubble in the market? When is it going to burst?

The KPO industry is based on a well defined revenue model which is sustainable and profitable unlike dotcoms, where revenues are based on several assumptions. Regarding the backlash in the west, American/ European companies are aware that the benefits of off-shoring far outweigh the negatives. Indians have been rated amongst the highest in the world on service orientation and intellectual capital. The pillar of the KPO industry is people, where India has a competitive advantage. The number of engineers, lawyers, doctors and other professional graduates in India is among the highest in the world. Outsourcing is here to stay and may well become as certain as a sunrise in the east tomorrow morning.

Conclusion

Clearly, this is an evolutionary process and certain roadblocks that exist need to be taken care of. Companies need to adopt a collaborative approach to tackle such issues. For instance, Scope has addressed these issues by adopting a relationship-based model. In this model, concerns on quality and timeliness have been addressed by Scope through a process of pilots and phased transfer of work. Technology - hardware and software - is world class. International certifications such as ISO and BS7799 also help. Likewise, Service Level Agreements that are mutually fair have been put in place. What helps the Indian case is the ready access to a large intellectual pool with expertise in areas such as research and analysis, not to mention reasonable English language skills and strong domain expertise. But finally, it is the management that plays a vital role in enabling the smooth operationalization of such remote knowledge partnerships. Only companies that have a strong pedigree, domain expertise, clear focus on the high-end space, a proactive solution orientation and a collaborative mindset will emerge as the ultimate winners.

Agnel Bestan

Jayaraman Ganesan 

When Warburg Pincus sold its remaining 5.65% stake in Bharti to Vodafone for $847.5mn in October 2005, it ended up making a whopping $1.92bn from a investment of $300mn made in Bharti Tele. since 1999.

India has emerged as one of the hot destinations for large global private equity firms in the recent years. Hordes of private equity professionals, venture capitalists and investment bankers are making a beeline to identify lucrative business opportunities in India.

Read more: Private Equity : Indian Scenario

 Honourable President of India Shri APJ Abdul Kalam

Ref: Reservation Quota for OBCs at the Indian Institutes of Management
 

Excellency,

1. We are writing to you as Pan-IIM Alumni Association, representing Alumni of the six Indian Institutes of Management (IIMs), in India and the rest of the world, to communicate our concerns regarding the Government’s proposed initiative to create reserved quotas for OBCs in Institutes of Higher Learning.

2. We believe that India should be a just, equitable and socially inclusive society. We acknowledge that socio-economic inequity remains a fairly widespread phenomenon in India, with vast sections of our society continuing to suffer social ostracism and economic deprivation. We also agree that improving access to education for deprived sections is an important step towards uplifting them and society as a whole. We are therefore, strongly supportive of affirmative action for the less advantaged sections. However, we do not believe that the proposed System of Reservations is the correct approach and we oppose the creation of reservation quotas for OBCs in Institutes of Higher Learning (IHLs).

Read more: Letter to The President