BPO to KPO – the rise of non-voice services in the Philippines

Feb 18, 2015

In a previous CurranDaly blog (which you can read here) we talked about the BPO industry and the competition between the Philippines and India (among other countries with smaller market share). To reiterate, BPO is the process of leasing another company to handle some business activities (Herguner, 2013). While the Philippines is set on maintaining its global leadership in voice BPO or contact centres, it is rapidly expanding its share of the global non-voice BPO services market – according to the Business Processing Association of the Philippines (BPAP). In this week’s blog we want to talk about this major offshoot from BPO which has been making headlines in the Philippines as an upcoming trend – KPO.

The BPO Relationship

What is KPO?

KPO is the outsourcing of knowledge intensive and core data-based business activities, which require specialised field expertise. The strong point of KPO is not the cost-saving but the added-value. It offers a sustainable competitive advantage for customers in all knowledge intensive industries (Mireau, 2007). Unlike voice-based BPO (contact centres), which is primarily based on cost advantage, and a relatively quickly trainable labour pool, KPO relies on a more limited resource of highly-skilled, educated employees, and it focuses on delivering value-added services to the clients. Its prime objective is to provide clients with useful insights that may assist them in their strategic business decision making process (IBEF, 2008).

Examples of KPO services include the following:

  • Research and development
  • Market research
  • Medical transcript preparation and legal processes
  • Data integration
  • Insurance and actuarial engineering services
  • Web development
  • Data integration
  • Project management
  • Fraud analytics
  • Equity Research and Investment Banking
  • Intellectual property & patent-related services
  • Publishing
  • CAD/CAM applications

The rise of KPO in the Philippines & Opportunities

Last year, the BPO industry grew at an impressive rate of 24% but the KPO sector expanded by an even more impressive rate at 30%, according to BPAP figures.

The Philippines produces a lot of graduates annually, and majority of them are coming from engineering and technology-related courses. They are the most ideal candidates to enter the KPO industry since it is generally geared toward IT processes.

Currently, the Philippines is internationally ranked as number one for the availability of high-end KPO jobs that include finance and Accounting. Filipino BPO workers are often cited for their comparative ability to handle unhappy customers well, and to solve complex problems. The country has more CPAs than any other in Asia with approximately 7,000 accounting graduates every year. There is an abundance of finance and accounting talent in the Philippines trained in international accounting standards. The finance and accounting industry is rapidly growing and we are seeing an increasing number of large multinationals who are setting up a shared service centre in the Philippines to handle their accounting, HR, and other back office processes.

Another very promising industry is outsourced medical transcription, which thrives in the immense medical talent pool of the Philippines. The large number of nurses, medical technologists, doctors and specialised medical transcriptionists in the country has been able to meet the increased demands of US hospitals, which are now required by the law to convert medical records into data format.

The Philippines has a business-friendly regulatory and government environment for BPO and KPO investors which have been identified as one of five priority development industries for the country. According to BPAP, investors can enjoy competitive fiscal and non-fiscal incentives. For more information on BPO/KPO investment in the Philippines, visit www.bpap.org.

By: Curran Daly + Associates


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