KPO to transform business efficiency in 2008

2008 will be the year in which Knowledge Process Outsourcing (KPO) takes massive strides in the UK, predicts the National Outsourcing Association (NOA) in its annual survey of upcoming trends.

KPO, the outsourcing of high value-add functions, such as research and development, is set to capitalise on the increasing popularity of, and trust in, business process outsourcing (BPO). The NOA says that now that companies have observed the benefits of trusting others to perform functions such as payroll, they have also started to place faith in external organisations to carry out mission critical operations. 

The looming credit crisis will likely lead to an upturn in outsourcing adds the NOA.  It argues that a downturn in the economy and possible recession will see increasing numbers of C-suite executives view technology and outsourcing as solutions to the need to slash overheads and minimise any negative impact on the bottom line.

However, among the other predictions made by NOA is the suggestion that virtualisation will challenge traditional IT outsourcing (ITO). NOA says that 2008 will be the year of the actual delivery of virtualisation, grid computing and thin client services, which may initially reduce the number of ITO contracts as internal IT groups look to this technology to solve cost and delivery problems.  However, NOA warns that the transition from client server applications to “virtual” may be more problematic and costly than expected, whereas outsourcing suppliers have the expertise, skills, models and tools that will allow them to offer these services effectively and cheaply. 

Another key trend will be Business Oriented Metrics which NOA says will come to the fore, especially within BPO deals. Focusing on metrics that assess how the outsourcing deal directly impacts the business will allow decision makers to understand how outsourcing affects the organisation’s bottom line.