Skills Shortage Limits Outsourcing of “Knowledge Processes”
The outsourcing of more complex, analytical tasks by US firms is picking up speed, according to a new study by KPMG. India is the main recipient of such “knowledge process outsourcing” (KPO). However, the growing demand for KPO is outstripping the supply of skilled workers, and firms are beginning to explore other states for potential supply venues.
The KPO trend is beginning to gain prominence at a time when businesses are still dealing with many issues involved with its predeccessors, information technology outsourcing and business product outsourcing.
Estimates of the total predicted value of KPO business vary widely, from over $5 billion up to $17 billion by the year 2010.
KPMG says the KPO industry faces a severe skills shortfall. As labor shortages grow and the rupee appreciates against the dollar, alternative venues for outsourcing are being explored. Canada, Australia, Singapore and South Africa are significant possibilities. For UK and euro-zone firms, Wales and Ireland also present strong potential.
The study cites three main challenges that KPO currently faces:
- Shortages of skilled labor
- The appreciation of the Rupee against the dollar
- Understaffed and under-resourced legal and compliance departments within firms that specialize in KPO.
In addition, compliance costs for varying regulatory frameworks, particularly for financial industry KPO, are expected to be especially high. These costs are expected to grow as greater KPO activity calls for a fresh round of regulatory statutes.
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