Importance of Knowledge Management and Outsourcing

Corporate power houses are always associated with changing their mantras to stay abreast with the times. Old timers will tell you of how the funda's moved from Efficient Work allocation techniques to Open Door policies to Six Sigma madness. The focus has primarily oscillated between processes and resources(inclusive of systems). Well, now the spotlight is on a different segment, which is the mixture of Processes and resources, Knowledge management. Though the initiatives may be implicit and not necessarily be known as Knowledge Management in all organizations, it is present in some form or the other.

The reason for the wild oscillation of focus on to KM is basically due to the business and revenue models, which are undergoing a radical change. Concepts unheard of 10 years back are now ruling the roost, like those of outsourcing. There are perils with every business model but the minimal impact on the organizations operations are considered beneficial. Organizations are increasingly focusing on working with the set of activities, which happen to be their core competency, and are outsourcing the rest to other organizations that may or may not be within the boundaries of their own country. However, Outsourcing could help cut costs by a Herculean 85-90% but it surely does open up the Pandora's box of problems.

Problem's like remote operations, knowledge sharing, cultural differences and in-effective communication across levels. Also, the advent of Cost Sensible Outsourcing industry has opened up a busy market for skilled labour, which in turn provides people with more choice, more flexibility. This has led to disappearing loyalty towards employer, poaching of efficient employees and the beginning of a rat-race to make more money as fast as one could, in a nut shell, the phenomenon is called Iteration.

In a time when the iteration rates of organisations are crossing 30% year on year, sending the HR departments into a frenzy re-recruitment drive, there is a prima facia need to ensure that knowledge from experience is trapped within the organization despite the high tides in iteration.

Now, putting a quick scan over the Opportunities and Challenges that Knowledge Management in a BPO Industry springs up. The opening of new markets in South and Southeast Asia has seen the advent of new businesses in the areas of global sourcing of products and services. India has been the germination ground for the Business Process Outsourcing (BPO) business and many global organizations have tapped the country’s ample human capital to effectively outsource critical business functions. The variety of processes within each one of the functional domains has triggered of increased interest in capturing best practices, processes and learning from each project that is outsourced. This is aimed at saving time, money and effort while training and setting up similar processes or ramping up an existing process / project. This has led to an increased interest in the Knowledge Management (KM) discipline, which deals with enhancing existing knowledge, capturing tacit elements and preserving knowledge assets for use in the future. It also promotes an organizational culture of sharing processes and learning within the organization.

Trends and surveys indicate that all organizations have begun to realize the importance of KM. However, most of them face the challenge in collating and assimilating all information and experiences, which may, in the case of some organizations, be spread across geographical boundaries. Even if knowledge is captured, getting people to contribute and utilize stored knowledge assets is a challenge. With these come further challenges, which are precipitated either because people are not aware of the involved technology or are not aware of the benefits of such an exercise. However, if these challenges are taken care of a lot of benefits emerge for organizations as a whole.

A robust KM system leads to development of service intensity, better quality of work and culture, globalization and uniformity of processes across the organization and removal of redundant processes. This in turn leads to faster services, employee retention, valuable knowledge asset creation, innovation and idea generation, reduced costs, and effective delivery of organizational goals to employees.

Intellectual capital and the effective use of it will be the trigger for gaining competitive advantage in the rapidly growing global economy. The success of organizations will depend on their ability to attract and retain their best workers. This will be made possible if they have effective performance management systems to enable continuous learning and motivate the employees. The firms would need to encourage knowledge sharing as part of the organization culture, i.e. organizations would need to view KM as an implicit part of daily work and create an environment where knowledge sharing is encouraged. This stands true in the new businesses that organizations are getting into globally. Prime among these business domains are the Business Process Outsourcing (BPO) business and lately the Knowledge Process Outsourcing (KPO) business.

Each process in the BPO industry involves work on a specific functional area, viz. HR, Finance – insurance, collections, payments etc. Each of the business functions or processes which are outsourced to third parties require the use of human capital which has some specialized knowledge and / or experience of working in that particular function. These people would then be qualified to be called knowledge workers for that particular function. For example, a process involving loans and mortgages would require employing personnel who are well acquainted with the concepts or those who have an idea about the concepts and will require extensive training on them. To build a robust process in this area, the organization will therefore be required to leverage the intellectual capital, which is recruited to increase revenue and reduce costs and to justify the business case. To enable this, it will be required to channelize collective learning, capture learning assets, share knowledge while working, innovate on set up processes, integrate appropriate technology and optimize workflow. The process will be successful when the organization is able to leverage, capture, and store what their learning is and share it in consequent phases with a new set of employees without much time and effort in its growth phase.

Therefore, organizations would need to develop a methodology by which they can optimally tap their intangible human assets, explore knowledge which is captive in the mind and in the variety of experiences that can be utilized in the future even if its existing set of personnel float across to other players in the industry. From a BPO perspective, KM also involves harvesting new knowledge for gaining competitive advantage, enabling access to a vast amount of project and process information and sharing best practices evolved in the course of working those processes. Further, it also involves applying management strategies and technology that support all the mentioned functions including groupware and intranets. Having said that, it would be quite a challenge to make KM implementation happen in a diverse work environment, which is a characteristic of the BPO industry.

Creating a "Knowledge – friendly" work culture is difficult if it is not in the genes of the culture because it involves selling an elaborate plan for change management to the organizations’ leadership. Likewise, a few of the other challenges that are faced by organizations can be enumerated as under:

1. Absence of knowledge systems that can capture tacit elements of knowledge from existing set of employees
2. Absence of a continuous learning i.e. a learning organizational culture
3. Lack of sharing of best practices across various departments, and upgradation of best practices with change in processes.
4. Lack of openness and inadequate dissemination of information between different stakeholders in the knowledge capture and storage process.
5. Employee reluctance to share information amongst themselves
6. Lack of avenues for searching knowledge sources and lack of mechanisms for constituting communities of practice.
7. Lack of motivation in the employees to accept and incorporate industry best practices into their operations
8. Loss of knowledge when people move across departments/Organisations as part of changes in job roles.
9. Lack of understanding of the company’s business goals, models , and strategies
10. Lack of understanding of metric measures and the Knowledge Management program

In the context of these challenges, there are many opportunities that Knowledge Organizations have, over other organizations. A few can be enumerated as follows:

1. Provision of the right knowledge at the right time for any user that wants it
2. A repository of all knowledge items where all knowledge assets can be collected and stored.
3. Effortless handling of routine and simple tasks simply by sharing best practices
4. Increased innovation and spread of ideas in process
5. Complex and unexpected tasks will be handled competently making effective use of past experiences in the same kind of tasks
6. Costs of training and building learning assets are lowered after the knowledge repository is in place.
7. Employee retention is enhanced as employees are recognized for their contribution to repositories and recognized in the performance management process
8. Operations get further streamlined by sharing of best practices and redundant processes can be done away with.

In summary, KM is intrinsic to the expectancy period of BPO/KPO's in India. The organizations have proved themselves by cutting costs, but time is now, to take the value addition to a level higher with KM. However, it still remains to be seen how much longer this concept sustains itself, before yet another mantra takes the world by storm.