Choices: BPO or KPO?

Mar. 28 (LBO) – I was at a meeting in Delhi in early March when I first heard the acronym KPO, of course without being spelled out.

From the context, I figured it meant knowledge process outsourcing and started using it immediately. One cannot afford to be slow on the draw with acronyms!

The key point of the KPO argument is that Sri Lanka should focus more on services like those provided by Amba Research and place less weight on the simple export of call-center services.

But seriously, the subject is important.

We’ve been talking about something like KPO for some years, though without the acronym.

Not because we were cleverer, but because Sri Lanka faced greater barriers in expanding the outsourcing/offshoring business, having fewer English-speakers than India.

If outsourcing/offshoring is seen solely in terms of call centers, the growth of the BPO industry should start flattening in 2007-08 if not before.

If seen solely as Colombo-based, the growth should stall even sooner.

The KPO-like business that I used to illustrate the “beyond BPO” theme was a Kandy BPO business I had heard about in 2002 or early 2003.

In this firm, 90 book-keepers did the back office work for British CFAs.

The book-keepers did not speak much English, they did not have to.

A handful of qualified accountants supervised their work and, where necessary, interacted with the British clients.

The spoken English problem was more or less solved.

Because we did not have enough young people who had basic English speaking skills that could be adapted for the call center requirements through accent neutralization, etc., we felt that we needed to place emphasis on work other than talking on the phone; book keeping, accounting, architectural drawings, etc.

Book-keeping ain’t KPO

The focus on the export of services other than call-center operations is correct.

But we risk missing the main point.

As in agriculture and industry, we cannot make our way in the world as the lowest-cost supplier of services.

China, Vietnam and even India will outperform us on that criterion.

We need to move up the value chain, supplying value-added products and services rather than basics.

In the case of business process outsourcing [BPO], it is possible to get pieces of the outsourced business processes on the basis of cost (and in some cases, on the basis of diversity of supply—when a company does not wish to put all its eggs in the Indian basket, it will give work to Sri Lankan firms, even if they are more expensive).

But a business process has many components, some basic, like answering phone calls, and some quite advanced and requiring highly skilled staff like the services provided by Amba Research.

The key point of the KPO argument is that Sri Lanka should focus more on services like those provided by Amba Research and place less weight on the simple export of call-center services.

If you can’t be the lowest-cost supplier, you should carve out a specialization, or in other words, become a niche supplier.

That’s what companies like Brandix and MAS are doing in apparel.

There is less competition and the returns are higher. But it’s not easy to occupy the niche.

Barriers to KPO

The principal barrier that kept the BPO industry from Sri Lanka for well over a decade was the monopoly environment in international telecom services.

That was removed in 2003 and BPOs took off.

Now, the defining constraint is the quality and quantity of the pool of workers.

What is the principal barrier to KPOs? The quality and quantity of the pool of workers. In the BPO business, you can push back the labor-constraint boundary by going to regional centers like Kandy and Matara, or by engaging the services of accent-neutralization specialists. It may be more difficult to improve the labor pool for KPOs.

What is the principal barrier to KPOs? The quality and quantity of the pool of workers.

In the BPO business, you can push back the labor-constraint boundary by going to regional centers like Kandy and Matara, or by engaging the services of accent-neutralization specialists.

It may be more difficult to improve the labor pool for KPOs.

KPO requires more than the ability to speak English in a particular way; it requires creative individuals.

Rote learning versus creativity

The answer to the question of whether Sri Lanka’s human resources are of adequate quality tends to be a Pollyannaish recitation of how intelligent our people are and how Sri Lanka is only second to the UK in absolute numbers of British-certified accountants.

It is common in Sri Lanka to equate the ability to pass exams with intelligence and creativity.

For certain activities, the kinds of skills that are needed to pass closed-book, time-limited examinations are very important.

Indeed, these skills are well suited for success in the kinds of routine or back-office work that has been outsourced by US and European companies since the 1990s.

But it would be a serious mistake to conclude that the exam-centered educational culture that dominates Sri Lanka prepares people for the kinds of creative functions expected in the KPO industry.

Creativity does not come from rote learning and regurgitation of established facts.

The skills most useful in passing exams may in fact hinder the development of creativity.

There is no syllabus for creativity; no list of required texts.

Base knowledge is important, but not enough.

Application of concepts to new and previously unimagined situations is what creativity is about, minimally.

Maximally, it is about developing new concepts and discovering new facts.

As the controversy about the recent erroneous examination results demonstrated, we are still hung up on objective testing as the sole method of assessing intellectual skills.

In the US, where a similar exam error affected the results of the SAT [Scholastic Aptitude Test] used in university admissions, it is said to have had little effect on admissions decisions: An official in charge of admissions was quoted by the New York Times as saying that the scoring revisions were a “nonevent” because much of the decision-making “is based on the strength of the academic transcript.”

Can creativity be taught?

Creativity does not come from rote learning and regurgitation of established facts. The skills most useful in passing exams may in fact hinder the development of creativity.

We know that rote learning is not learning that leads to creativity.

We know that sticking to the syllabus and acing the exam is not it.

It’s relatively easy to describe what learning that is conducive to creativity is not; but much harder to say what it is.

But this is a vital conversation we must begin now, if we are not to be 10 years behind on KPO as well.

Perhaps one of the best ways to get the conversation started is to quote the world’s second most famous university drop out, Steve Jobs of Apple, Next and Pixar (speaking at the 2005 Commencement of Stanford University):

“I dropped out of Reed College after the first 6 months, but then stayed around as a drop-in for another 18 months or so before I really quit.
. . . . . . . . .
After six months, I couldn’t see the value in [College]. I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life.

So I decided to drop out and trust that it would all work out OK.

It was pretty scary at the time, but looking back it was one of the best decisions I ever made. The minute I dropped out I could stop taking the required classes that didn’t interest me, and begin dropping in on the ones that looked interesting.

It wasn’t all romantic. I didn’t have a dorm room, so I slept on the floor in friends’ rooms, I returned coke bottles for the 5¢ deposits to buy food with, and I would walk the 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple.

I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example:
Reed College at that time offered perhaps the best calligraphy instruction in the country.

Throughout the campus every poster, every label on every drawer, was beautifully hand calligraphed.

Because I had dropped out and didn’t have to take the normal classes, I decided to take a calligraphy class to learn how to do this.

I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great.

It was beautiful, historical, artistically subtle in a way that science can’t capture, and I found it fascinating.

None of this had even a hope of any practical application in my life.

But ten years later, when we were designing the first Macintosh computer, it all came back to me.

And we designed it all into the Mac.

It was the first computer with beautiful typography.

If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts.

And since Windows just copied the Mac, it’s likely that no personal computer would have them.

If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do.

Of course it was impossible to connect the dots looking forward when I was in college.

But it was very, very clear looking backwards ten years later.”

http://news-service.stanford.edu/news/2005/june15/jobs-061505.html

-Rohan Samarajiva: samarajiva@lirne.net