Why Knowledge Process Outsourcing is all the Rage in the Philippines? Knowledge process outsourcing (or KPO), is currently all the rage in the Philippines this year, 2018. The country is emerging as not only a prime destination for Business Process Outsourcing (or BPO), but they are now high on the KPO scale around the world.

In fact, at the moment at least 40% of their outsourcing work comes from KPO and this is set to expand. Currently KPO is growing faster than BPO and will soon reach the same market size.

Perhaps you don’t know too much about Knowledge Process Outsourcing and its effect on the economy of the country? This article will tell you more about KPO and why it has become so popular with both the Filipinos and the outsourcing companies.

Outsourcing is a mature industry in the Philippines and it has brought in billions in
revenue, both from BPO and KPO. Business Process Outsourcing in the Philippines began in the 1980s, while Knowledge Process Outsourcing emerged a couple of decades ago. The country is following hot on the heels of India and China.

Knowledge Process Outsourcing involves allocating high level tasks, such as research, information gathering, and analysis, to a company other than yours. It is an extension of Business Process Outsourcing, but it requires highly specialized skills and experience.

Market and equity research, technical content writing, legal and medical services, tax preparations, animation and design, and research into pharmaceuticals and biotechnology are all good examples of the jobs offered.

To be able to work in one of these fields you will need a high level of expertise and advanced technical and analytical skills. A degree or higher qualifications is required to fulfill any of these positions. More than anything else, the people working in the KPO industry need to be able to make their own decisions.

The Philippines is emerging as a prime destination for companies employing people in the KPO sector because the country has a large pool of university graduates who have the skills required. In fact, around 550,000 students graduate each year. With that level of talent available, the Philippines are gaining recognition in KPO.

In addition to the skills learned at college, some KPO jobs require specific skill sets and the outsourcing industry’s associations, led by the Information Technology and Business Process Association of the Philippines, are making sure that suitable training is provided.

In association with government and business these associations are assimilating a
growing list of training facilities for a variety of KPO skillsets.

1. The Rise of Artificial Intelligence

Artificial Intelligence is basically a computer science which creates intelligent machines that replicate certain jobs which humans perform. The term is usually applied to the art of developing systems with the intellectual processes of their human counterparts.

Tasks which computers can take on include speech recognition, problem solving, the ability to reason, and learn from past mistakes. The digital computer was created in the 1940s and since then it has been proved that computers can carry out difficult tasks, like playing chess for example.

However, despite this, there are still many areas where computers cannot carry out the work of people. The rise of artificial intelligence in the BPO sector has resulted in many Filipinos losing their jobs.

The call center industry, customer service, and IT support are areas which are being taken over by artificial intelligence. Wherever you are, you probably get automated phone calls from telemarketers and if you ring a call center, it will be automated unless the problem can’t be solved by a machine.

Then you finally get a human to help you, but many jobs have been lost in this process. As so much of the process is automated, there is no need to have as many staff.

However, artificial intelligence is not yet equipped for highly specialized tasks, which is good news for the Filipinos. Many of them hold degrees and even post graduate qualifications, so it is a natural progression that they would want to work in KPO.

With artificial intelligence taking away some of the BPO jobs, the doors have opened up wide for the Filipinos in KPO.

2. Better Pay

KPO pays better rates than BPO as it needs highly skilled people. This works well both for the outsourcing company as well as the workers. If they get a job in KPO, Filipinos can expect to receive higher wages than they would do if they worked for a Filipino company.

The government is keen to keep its highly skilled workforce in the country, so they actively support the KPO industry.

Let’s look at the outsourcing companies next. They do not have to pay as high wages to the Filipinos as they would do hiring people from their own country. In fact, the cost of labor for Filipino professionals is one of the lowest in the world. You may think of this as exploitation, but this is far from the truth.

The Philippines is a third world country and the cost of living is low. As a result, the lower pay that they receive still enables them to live a decent life, pay their bills, and afford luxury goods. As can be seen, it is a win-win situation.

In addition, inflation has been steady and low for quite years in the Philippines. This means that you as an outsourcing company won’t suddenly be expected to give your workers a raise to cover an increased cost of living.

As well as paying lower wages, companies do not have to pay for sick leave or vacation time, which means that their wage bill remains smaller. The Filipinos on the other hand earn enough to compensate for this.

This reduction in overall costs has given entrepreneurs with a limited budget the opportunity to start KPO businesses from scratch instead of setting up their company employing people from their country of origin. As a result, they can profit financially very quickly.

In addition, because these high-end services are provided at a lower cost, unemployment is decreased and the economy has benefited by not having to pay unemployment benefits.

3. Cuts Down on Business Costs

Companies who offshore their businesses to the Philippines not only cut down on the cost of wages, but they also save on operation costs while keeping or even increasing their productivity level. These companies can cater to more customers without having to worry about creating more office space.

It is always a worry for companies that staff may leave and that they will have to train new staff. This is not a problem when they employ Filipinos in their Knowledge Process Outsourcing business as they won’t have to pay to train new staff.

4. The Filipino People

Companies have been turning to the Philippines more and more to fill their KPO positions because of the personality and attitude of the Filipinos.

They are warm and friendly, easy to work with, hard working, and are well educated, with degrees in a wide range of subjects and higher qualifications, you will know you are getting among the best in the world.

In addition, Filipinos have a cultural connection to the West, especially the United States, which makes them easy to work with. The country used to be a US colony and the Filipinos are aware of the culture and work ethic in America.

This makes for easier understanding in the work place. When it comes to legal matters, the Philippines is the perfect choice for an American company as the laws are very similar.

5. Longer Engagements

Companies know that they are going to get cheaper staff when they outsource to the Philippines. Businesses aren’t looking for the cheapest option, but for one which gives the best value. A relationship needs to be established between the two parties and a longer one usually gives more value.

The outsourced team is given a chance to get to know the company they are working for and will gradually find it easier to complete tasks. In this way, time is saved, and the business can move forward more quickly.

6. Prime Location

The Philippines is in an excellent spot for trading with different nations. It has easily accessible ports and airports. Outsourcing companies would do well considering the Philippines if they want to be recognized as a global brand.

8. Government Support

The Philippine government has realized how important the KPO industry is to the country. Not only has it brought in work for thousands of skilled people, but it helps to cultivate the creative abilities of what is already a creative culture.

In addition, the government doesn’t want to lose their highly educated workforce to foreign countries because they improve the economy.

The government has set up many benefits to entice companies to set up their business in the country.

You don’t have to pay income tax for the first four to eight years, there is a deduction of labor expense for the first five years, a domestic sales allowance of up to 30%, and finally there is a VAT exemption for local services such as water and electricity.

9. An improvement in Productivity

If your company outsources to the KPO sector, you and your staff will be able to focus on core business procedures while leaving the high-end work to your outsourced staff. It will help you to save time giving you the opportunity to concentrate on other aspects of your business.

You can explore new revenue areas for example, speed up other projects, and focus on your clients. All this is possible because you will have a highly competent outsourcing staff.

11. A Flexible Service

Knowledge Process Outsourcing is so popular in the Philippines the companies that outsource here offer a flexible service. Client demands change as time goes on, but the outsourcing companies can deal with this as the workers are experienced enough to cover a great range of tasks.