Competitive knowledge is more and more being outsourced to KPO providers, signifying a change in the opinion that core business activities cannot be outsourced. With the opening of the world economy, countless surprises have taken place in the current business scenario of KPO services in South Africa. The western world has started realising the potential and the significance of the smaller countries of Asia in providing quality services at the lowest possible rates and is treating this fact as a revolution. Similarly, within the Asian nations revolutionary trends are taking place in terms of expansion and spread of service providers to rural zones or small cities.
In the above stated scenario, more than a few trends are emerging in the outsourcing activities-based outsourcing industry. Few of the newest trends are listed below which are likely to shape the future of outsourcing KPO services in South Africa.
Need of Specialists
Boom in the KPO industry is an established fact now and as per estimates of numerous studies the industry shall range high and this envisages a growth rate of 40 to 50 % for the industry for the next 5-6 years. The above growth of Top KPO companies will necessarily mean a quantum increase in the employees/ specialists engaged in providing Knowledge Process Outsourcing services. There have been expectations of looming labor shortages in the outsourcing industry and the beginning of the trend is likely to be witnessed soon, at least in KPO. High level compensation than Business Process Outsourcing for employers and the high-end work requirements will help Knowledge Process Outsourcing jobs to be hot through the upcoming years.
Consolidation and disintegration of outsourcing fields in KPO
The emergence of “KPO services in South Africa” will see a proliferation and the entrance of new service providers in the arena of the business. “The growing prospects in knowledge solutions are attracting a young breed of entrepreneurs, absolutely professionals like engineers, scientists, lawyers, chartered accountants, etc. into the outsourcing industry. Low infrastructure and set-up costs as well as minimal entry requirements will encourage the smaller technically strong companies to establish Knowledge Process Outsourcing setups. Unlike commodity services of Business Process Outsourcing such as CRM, call centres or large-scale back-end processing, the minimal critical size for Knowledge process outsourcing firms need not be very large. What is essential is to have a high grade of specialisation which will allow even small companies to function lucratively. Additionally, since the KPO business is not essentially scale driven; smaller business units having the total strength of even 20 professional is also gaining fame along with the concept of freelance work. This style of functioning is driving the increasing consolidation and fragmentation of service providers.
Mergers and Acquisitions (M&A) to increase
M&A activity has reached new heights and is expected to be high in the upcoming years as a mode of Business expansion. However, beside mega deals, high number of small deals shall also turn fruitful. It will be driven by acquisitions in the knowledge based services domain, where a trading acquirer will find it extremely useful to enter into small deals to gain new clients, domain knowledge and position themselves in this small, but growing section.
In the coming years, we expect Knowledge Process Outsourcing to become a major target area for acquisitions. KPO’s M & A will form the growth strategy of two types of companies:
- Multi directional & Multi-service Business Process Outsourcing firms or companies wishing to climb the value chain by adding high-end proficiencies to their portfolios.
- Already existing Knowledge Process Outsourcing companies which want to get benefited particular domain expertise, or clients in a specific area or geographic region.