Outsourcing: Evalueserve Interview (Part 5)

By guest author Tony Scott

The Value of Productizing Knowledge Processes

Tony: You are talking about how the downturn is impacting these kinds of knowledge process outsourcing companies. Are there things that you are doing to try to move into even higher value services? How about productizing parts of your services?

Alok: Yes, we’re doing some of both. Productizing our services is something that is really key to us. To use the example of a consultant, a description which can really be applied to any high-value-add knowledge worker, the way we look at it is that the consultant in some sense is an artist. The processes that he or she follows are not that well defined. It isn’t standardized, at least from one industry to another. But if we break it into subprocesses, our general belief is that about one-third is more or less an art, but the remaining two-thirds can be converted into a process or a science. That is where our entire belief of knowledge process outsourcing comes from, that if the remaining two-thirds can be converted into a science or a process, then we can do it in places like India, or anywhere where we can find and staff a particular level of talent.

In some sense that’s already happening with typical knowledge work, because a senior consultant typically has associates and analysts, so they are already breaking up the process. In our case it has to become more explicit and systematized, because the people supporting the senior consultant can no longer come back to that consultant’s office and ask how the subtasks get connected, because now the supporting professionals may be thousands of miles away.

Tony: And frequently not only not in the same time zone, but in time zones that make collaboration inconvenient.

Alok: Right. So there has to be much more explicitness about what the process is for each of the subtasks. We believe in many of these knowledge worker segments, anywhere from 20% to 40% will remain an art, such as high-end consulting, lawyer services, and investment banking, and so forth.

The other 60% to 80% could be taken pretty much anywhere in the world, as long as the people have the knowledge, the capability, and the analytic experience to do it.

Now out of that 60% to 80%, I think another 25% to 35% of many processes can be done using software. You can build macros to really improve the overall efficiency and productivity of the system. For example, for quantitative hedge funds we have figured out some macros that we can apply so as to normalize their sales for the day. A simple macro would be converting euros and dollars and Chinese yuan and Indian rupees. Nothing deep about it, but rather than doing it by hand, you can build a small macro. There are many examples of where software can applied to such problems.

Tony: But sometimes people don’t think about it, or they don’t have the incentive to automate.

Alok: Yes, because sometimes when you look at these problems, the reason why people haven’t automated the process is because there isn’t enough volume. To automate many problems you need lot of volume eventually, because you are going to spend a lot of time up front automating the process. To spend time writing the software becomes a cost, so you need to make sure that your sunk cost is averaged over enough volume of data. For an individual hedge fund there may not be enough data to justify it, but it becomes attractive when can do it across multiple hedge funds.  That’s the productizing part we believe in. We’ve often called it “KPO 2.0,” where we believe it’s a software and services model.

Tony: So parts of the process will be automated, but there still is a lot of human touch all the way across the entire process? Then what you’ve created is a technology-enabled knowledge process: high human touch that adds value, enabled by automation that reduces costs.

Alok: That’s right.

This segment is part 5 in the series : Outsourcing: Evalueserve Interview
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