How Cognitive Dissonance Skews Marketing Surveys

posted by: suji krishnan. s

How Cognitive Dissonance Skews Marketing Surveys


Cognitive dissonance: It's the discomfort caused by two conflicting thoughts. It's the pain of learning something new that contradicts what's already accepted as true. And it's often strongest when a person believes something about himself, but acts in a contradictory fashion. Dr. Leon Festinger, then of the University of Minnesota, first proposed the theory of cognitive dissonance after studying a doomsday cult lead by a suburban Minneapolis housewife. Marion Keech was convinced that aliens would rescue her and her followers before a massive flood occured at midnight, December 20, 1954. Many of the cult members waiting for the end of the world quit their jobs, sold their homes, and gave away their belongings and savings. What does a cult follower do when faced with incontrovertible evidence that his beliefs are wrong? He rationalizes. And interestingly, his belief becomes even stronger. Rather than admit they had changed their lives on an invalid premise (and rather than risk being laughed at), Keech's followers chose to believe their faith had persuaded the aliens to save the world. Dr. Festinger explained that the more important conflicting ideas are to a person the greater the cognitive dissonance they cause. The discomfort also increases when accepting the validity of one idea requires the complete denunciation of the other. If a person can't rationalize, or explain away the discrepancy, he suffers. And according to Festinger, when teaching the new information forces people to compromise their self-image, they will not learn from their mistakes. Instead of admitting their own fallibility, they'll continue making the same bad choices. (This denial of the evidence also contributes to confirmation bias, in which an individual picks and chooses among the “facts” he'll accept as true.)
How does cognitive dissonance affect marketing surveys?
One of the least reliable methods of predicting consumer behaviour is to ask consumers what they intend to do. And yet, companies keep using “intent to purchase” surveys to determine the course of their business.
“Do you intend to purchase a hard drive? A dishwasher? A case of Cabernet Sauvignon? A new home?”
Do people really know what they're going to buy?
“In the next year will you buy a digital camera? Shares of stock? An iPhone? A timeshare? A second vehicle?”
Does anyone know?
Some do. Most don't.
Why is that?
When the ideal of “what I want” collides with the reality of “what I can afford,” cognitive dissonance is the likely outcome. We're a nation of optimists. We all want to believe that next year will be better than this one. It's painful to admit that we don't have the power to create the lives we want, even when we only have to admit it to ourselves.
So we deny. We rationalize. We hope. And we don't tell the researchers what we suspect to be true. We don't even tell them what we think they want to hear. We tell them how we see ourselves.
What can you expect when you ask what people want?
You can expect them not to care that you want to know. You can expect them not to want to do any mental work to help you get to your answers. You can expect the vast majority to refuse to answer. They don't have time. And expect that most don't truly know what they want. By definition, any of these folks who take your survey are giving an inaccurate description of their preferences. Those who know what they want, and complete your survey, often provide incomplete answers. And in those very few cases where your survey does compile a complete and accurate description of your customer's preferences, what you have is a static picture of a constantly moving target. Over time, those preferences will become stale and less accurate. And there's still the question of what you're measuring. When you ask about intent to purchase, are you measuring stated preferences? Behavioral preferences? Predictive behavior? Are they the same? If not, how do they differ?
The lesson: Be very careful with intentions.
Frankly, the only reliable data tracks behaviors. Actual purchases. Not what people want, but what they've actually paid for. A recent study of automobile shoppers indicates that 58 percent of those who bought, drove off in a car other than the one they came looking for. And when questioned, a full 42 percent arrived at the lot without having made a clear choice between a new vehicle and a used one. Maybe what they were “just looking” for was a good salesperson. Regardless, you can easily see that surveying intention to purchase provides pretty much useless data. Information is moving faster than ever. The rate of change keeps accelerating. And it's unfortunate that in some industries, by the time changes in customer behavior have become obvious, its too late to adjust and stay competitive.
How can you predict what people will buy?
Even people who don't know what they want can usually rank their preferences. Ask them to choose between options. Ask them for trade offs. Help them to the decision point. Help them to choose which products, or even features and benefits are worth more to them. Would they like a cell phone that can give them directions to the nearest Italian restaurant? Sure. Who wouldn't? Would they pay an extra $100 for it? Ehhhhhh, maybe not. If there was only one extra feature beyond basic telephone service, would they give up the ability to play MP3s in order to have those restaurant directions? Absolutely not. Would they give up the four function calculator? OK, perhaps they would, but they still won't pay extra for the directions. Ah, now you have a way to uncover some truly meaningful information about market demand. In the absence of actual sales data, identifying the trade offs important to your customers will give you a much better understanding of what they'll pay for.

ENTREPRENEURSHIP - BRIEF HISTORY

POSTED BY: NAJEEM BABU U.K

Entrepreneurship is the act of being an entrepreneur which is a French word meaning one who undertakes an endeavor. Entrepreneurs assemble resources including innovations, finance and business acumen in an effort to transform innovations into economic goods. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses; however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities start spin-off organizations.

Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Angel investors generally seek returns of 20-30% and more extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs. Lately more holisitc conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship emerged.
HISTORY

The entrepreneur is a actor in microeconomics, and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the mid-16th century, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years.

In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1940s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. In Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation.^[3] Entrepreneurship employes what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is hotly debated in academic economics. An alternate, description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw.

For Schumpeter, entrepreneurship resulted in new industries but also in new combinations of currently existing inputs. Schumpeter's initial example of this was the combination of a steam engine and then current wagon making technologies to produce the horseless carriage. In this case the innovation, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. It did not immediately replace the horsedrawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation. Despite Schumpeter's early 20th-century contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead assuming that resources would find each other through a price system). In this treatment the entrepreneur was an implied but unspecified actor, but it is consistent with the concept of the entrepreneur being the agent of x-efficiency.

Different scholars have described entrepreneurs as, among other things, baring risk. For Schumpeter, the entrepreneur did not bare risk: the capitalist did.

Some notable persons and their works in entrepreneurship history.

For Frank H. Knight (1921) and Peter Drucker (1970) entrepreneurship is about taking risk. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture. Knight classified three types of uncertainty.

• Risk, which is measurable statistically (such as the probability of drawing a red colour ball from a jar containing 5 red balls and 5 white balls).
• Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls).
• True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other coloured balls).

The acts of entrepreneurship is often associated with true uncertainty, particularly when it involves bringing something really novel to the world, whose market never exists. However, even if a market already exists, there is no guarantee that a market exists for a particular new player in the cola category.

The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.

The entrepreneur is widely regarded as an integral player in the business culture of American life, and particularly as an engine for job creation and economic growth. Robert Sobel published The Entrepreneurs: Explorations Within the American Business Tradition in 1974. Zoltan Acs and David Audretsch have produced an edited volume surveying Entrepreneurship as an academic field of research, and more than a hundred scholars around the world track entrepreneurial activity, policy and social influences as part of the Global Entrepreneurship Monitor (GEM) and its associated reports.

VALUE CREATION. By Sreeranj Sreenivasan

VALUE CREATION

Value creation is a term that crops up so often and in so many contexts that it is tempting to dismiss it as just another business buzzword. It is anything but. Value creation is the animating principle of modern management and its chief responsibility. It reflects a view of what perfomance is and how organizations perform.

What Is Value?

In industrial markets calculating the economic value of a good or service (that is, determining how much it’s worth) is often fairly straightforward. The value created for the customer usually resides in time or labor or materials saved, and those savings can be quickly translated into a cash equivalent.
But the service may also create value in another way. In consumer business, which account for two-thirds of the U.S. economy, there is usually a difficult –to-quantify leap to be made between the product or service delivered and the value created. Charles Revson, the cosmetic executive, once quipped that his industry sells “hope in a jar”. For consumers, value often resides in such intagibles: in a product’s look and feel; in emotions such as nostalgia; in status and prestige. When people are asked what single item they’d in the event of fire, they seldome talk aboutthe most expensive thing in the hose. They talk about the family photographs. Even here , where value seems to defy definition, it is possible.

Customers Define Value.

Value then not only takes many forms, but also it comes from many sources – from a produc’s usefulness, its quality, the image associated with it ( by advertising and promotion), its availability, the service that accompanies it. The more intangible the value appears, the more important it is to recognize that value is defined by customers, one person at a time. Many people love fast food, but many hate it. Some people swear by their cell phones, others swear at people who use them in public places. A two week vacation in a primitive nature sanctry is one person’s heaven, and anothers hell.
When management defines its objective as ceating value for customers, it means the organization exist s to serve the needs of people who are outside it. This is what diffrentiate an organization from a tribe, a social club, a family, or another group that focuses only on the well being of its members. One of management’s chief responsibilities is to remember this external orientation and to remind others about it constantly.
Constant reminders are necessary, because it’s natural for people to who live inside an organization to get wrapped up in what they do, to focus on what they make. The may forget to look outside, how the customers valueing their products. One of the most powerful insights of modern management is that there is really only one test of a job well done – a customer who is willing to pay for it.
Customers don’t care how much hard work or ingenuity goes into designing a product. In the 1990s, for example, Silicon Graphics had some of the best engineers in the Valley. The company pored million of dollars into the development of interactive television, which its engineers rightly thought was a ground – breaking technology. But ITV turned out to be a product in search of a customer. Kittu Kolliri, one of the lead engineers , explained company’s fiasco this way: “ We got all wrapped up in the technology. We all thought, ‘Dammit this technology is so cool. It must bring value to someone.’” It didn’t. Bringing vale to some vaguely defined someone isn’t good enough. Only by meeting the needs of customers as customers themselves define those needs, can an organization perform.

Value as Efficiency: The Manufacturing Mindset

Recently we talk about customers and their insight about value. Historically business were defined by producers, what they made. A company was in the steel business, say, or the coffee business or the car business. The way to succeed was to figure out how to make more steel or more coffee or cars using the same or fewer resources.
The challenge in other words, was to increase productivity, and the way to that was to make the production process as efficient as possible. This focus on efficiency made great sense in an industrial economy in which demand far out stripped supply. Management’s mission was making more things, more cheaply. Making the product affordable created a vast new market.
They assumed that value meant making whatever you were making more efficiently. They were not wrong, they were just narrow in how they thought about management’s mission. It didn’t occur to them to question whether they were making the right things to begin with, or whether you could create more value by undertaking broader missions. It was a reasonable assumption to make at the beginning of the twentieth century, when the number of goods produced was relatively small, and the major challenge was simply to produce more of them at lower cost. But now the scenario has been changed. So, the question – what is value? – needed a new answer.

The Marketing Mindset: What Does the Customer Value?

Peter Drucker in his landmark book, The Practice of Management, offered a critical redefinition of value. Efficiency was necessary, but not sufficient. Customers don’t buy products, drucker observed, they buy the satisfaction of particular needs. This means that what the customer values and buys is often different from what the producer thinks he sells.
Defining value as efficiency, led to an intense focus inward, on what company makes and how it makes it. This has become known as the manufacturing mindset. It suggests that you start with what you make, you price it based on what it cost you and then you sell it to the customer. It is a make – and – sell model of how a business works.
Drucker urged a completely new way of thinking. If you want to understand value, don’t focus inward on what you make, the way the engineers developing ITV did it. Look through customer’s eyes, from outside in. The new perspective became known as marketing mindset. It is a sense – and – respond model that starts with that what the customers wants, and with how much she or he is willing to pay for it. This determines both what you make and how much you can spend making it.
Entrepreneurs who succeed always create value for customers. But over time, organizations, especially large ones, tend to make on lives of their own, and can lose touch with the market surprisingly quickly. This is why drucker’s discipline remains such an important antidote to the natural tendency to focus inward, on what you make and you do.

Maximizing Shareholder Value: A Parenthetical Perspective.

Till this point, we didn’t consider another important group for discussion – they are shareholders. Managers are more responsive to the interest of owners, and more aware of the direct link between delivering value to customers and creating value for shareholders. In some industries, satisfactory underperformance had been a kind of gentlemen’s agreement. Those days were gone. Now shareholders would set the bar, and the capital markets would define performance.
Economists like Milton Friedman argue that the shareholder must always come first, that the goal of management, purely and simply, is to maximize shareholder value. Although individual managers may differ in their social philosophies, no contemporary CEO can afford to take the capital markets for granted or ignore their discipline. Thus, it has become more critical than ever for executives to understand the process of value creation and the drivers of superior performance.

How Is Value Created?

Over the past two decades, management has been transformed by the insights about how value is created and the need, therefore, to manage across the organization’s boundaries. For example, a decade ago, purchasing was a low profile function, the goal of which was to get the best terms for a predetermined set of items. Today purchasing has evolved into supply-chain-management, and this is a real shift, not just an instance of title inflation. Supply-chain management reflects a far more systematic way of thinking about how a company creates value for its customers: through what it buys and not just the price it pays, through access to suppliers know – how and innovative capability as well as its goods.
The value creation we’ve been describing has worked its way into every aspect of a company’s business. When organizations look from outside in, they often see a brave new world of innovative offerings in the form of solutions and value – added services aimed at customers’ needs, not simply selling them products. To get a sense of how dramatically this can transform a company, consider how GE has changed under Jack Welch’s leadership. Once one of the world’s premier industrial companies, GE now gets 80 percent of its from services.
GE has not been alone in discovering that often more money can be made from the services related to a product than from the product itself. Consider the service contract that you are offered when you buy a new television or computer, or the financing available from the dealer who sells you a new car. Much of IBM’s success in the 1990s reflected its shift in strategy from hardware to solutions. In the new economy, value lies increasingly in such intangibles.

Value Is a System

This article with the assertion that management’s chief responsibility is to create value. But whether it has delivered on its responsibility isn’t management’s call to make. That is the province of outsiders who are free to decide, day by day and year after year, whether they will continue to support that organisation.
Determining who the relevant outsiders are may be management’s single most critical decision. In the business world, customers aren’t the only constituency modern management has to satisfy. In reality, every successful organisation depends on multiple players, each of whom defines value in a particular way.
Shareholders and others who provide investment capital define value in financial terms that are easy to measure. For employees, the equation is more complex. They value today’s wages and health benefits, but they are also likely to price such things as training or stock options whose value lies in the future. Value or employees may also reside in such noneconomic factors as job satisfaction, status or pride. Suppliers may value long term relationships and the chance to develop cutting-edge technology as much as they care about price alone.
Modern management’s challenge is to ensure that each of these necessary players will choose to participate in the system that creates value for all of them. The term value creation captures this larger, more systematic understanding of performance in a way that earlier definitions of performance did not. Value creation includes the industrial era’s focus on efficiency, as well as the consumer era’s focus on the customer, o quality, and on choice, but it is capacious enough to include all of modern management’s other constituents as well.

KPO: The Future of Business

What is KPO?

It is being claimed that KPO is one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping into Knowledge Process Outsourcing because of its favourable advantageous and future scope. But, let us not treat it only a 'B' replaced by a 'K'. In fact, Knowledge process can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. And when this activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing.

Knowledge Processing Outsourcing (popularly known as a KPO), calls for the application of specialized domain pertinent knowledge of a high level. The KPO typically involves a component of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). KPO business entities provide typical domain-based processes, advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is handling more amount of high skilled work other than the BPO Industry. While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency.

In fact, it is the evolution and maturity of the Indian BPO sector that has given rise to yet another wave in the global outsourcing scenario: KPO or Knowledge Process Outsourcing. The success achieved by many overseas companies in outsourcing business process operations to India has encouraged many of the said companies to start outsourcing their high-end knowledge work as well. Cost savings, operational efficiencies, availability of and access to a highly skilled and talented workforce and improved quality are all underlying expectations in outsourcing high-end processes to India

The future of KPO has a high potential as it is not restricted to only Information Technology (IT) or Information Technology Enabled Services (ITES) sectors and includes other sectors like Legal Processes, Intellectual Property and Patent related services, Engineering Services, Web Development application, CAD/CAM Applications, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO ) etc.

In today's competitive environment, focus is to concentrate on core specialization and core-competency areas and outsource the rest of the activities. Many companies and organizations have come to realize that by outsourcing non core activities, not only cost are minimized and efficiencies improved but the total business improves because the focus shifts to the key growth areas of the business activity.

Scope and Future of KPO

According to a report of National Association of Software and Services Companies (NASSCOM), the Indian chamber of commerce that serves as an interface to the Indian Software industry, Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India. Another report predicts that India will capture more than 70 percent of the KPO sector by 2010. Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also expected to join the KPO industry.

According to a recent study by “Evalueserve, a Gurgaon based outsourcing company having service chart for global world”, the global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent, from $1.2 billion in 2003 to $17 billion in 2010. Compare this with the prediction for the low-end outsourcing services market. This is expected to have a CAGR of 26 per cent, from $ 7.7 billion to $39.8 billion in the same period.

Evalueserve says India provided $3.5 billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of 36 per cent during 2004 to 2010. Hence, it is likely to earn $30 billion in 2010 by providing these services.

Says country general manager, Kelly Services, Achal Khanna “India still maintains the competitive advantage for providing, the combination of the most cost-effective and high quality manpower- this is India's strength in the off-shoring business”.

In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO), etc.

"Over the past year or two, the outsourcing industry has been throwing up jobs for Doctors, Engineers, CAs, Architects," says Jacob William of the Bangalore-based Outsource2India, which employs 500 people and offers services in the big-buzz, big-bucks area of knowledge process outsourcing. "Unlike the first wave which was more about entering data and answering phone calls, these jobs involve skill and expertise."

Also, of course, the talent is much more affordable. "Law firms in the US charge an average of $400-450 per hour, and we do the same work for $75 to $100 an hour" says Kamlani" who is an outsourcing provider in the same area.

In the Indian context, KPO salaries could be 25-50 per cent higher than those offered to the same domain experts such as Engineer, Doctor, CA, Lawyer, Architect, Biotechnologist, Economist, Statistician and MBAs, it said.

In its annual publication Strategic Review 2005, Nasscom has said the high-end activity of the BPO industry—the KPO or knowledge process outsourcing could be worth $15.5 billion by 2010.

According to earlier estimates, the BPO industry itself was expected to be about $20bn by 2008, hence a very significant portion of the sector—in excess of 50% is now projected to be knowledge based. This represents significant metamorphosis of call centre sector business to completely different model. Interestingly, Sunil Mehta, Nasscom vice-president research, distances himself from the estimates.

The projections are based on a white paper released by Evalueserve. The paper cites reasons for a possible KPO boom. It says higher savings by outsourcing knowledge based activities combined with the scarcity of specialized talent in developed countries could lead to growth in the KPO sector.
Billing rates for KPO are higher at $30-45 per hour compared to just $10-14 in the BPO business. However, the paper also warns of several challenges like higher quality standards, greater investments and inadequate talent.

The study estimates that while the compounded growth rate of BPO till 2010 would be just 26% KPO is expected to be grow at almost 46%.

Bottlenecks in Future Growth

A study on Knowledge Process Outsourcing (KPO) sector shows a huge supply gap that threatens to cripple its growth. Rocsearch, a UK-based research services company, has gathered evidence suggesting that the KPO market may just about reach a size of $5 billion by 2010, manned by 100,000 people instead of projections of a $12 billion market supported by 250,000 employees.

This accentuates Nasscom's projections of a shortfall of 500,000 workers in ITES and BPO sectors by 2010.

Assuming an average revenue per person of $55,000 over the next four years, 100,000 knowledge workers point to a $5 billion market. This size, though based on a CAGR of 32%, is still 60% less than the $12 billion potential projected by big KPOs, like Evalueserve, last year.

Rocsearch COO, Ashish Sinha says the sector is restricted by low employability despite high graduate turnout, and competing demand from other sectors as jobs grow faster than the workforce.

For example, all the 2,000-odd IIM and top 10 B-School graduates are employable, while less than half the 84,000 graduates from Tier-II B-Schools would make the grade.

The study sees only 500,000 of the over 3 million workers added to the labour pool in 2005 as employable in global firms and of these, just 2 in every 100 are likely to opt for work in knowledge space.

Evolution of KPO : BPO, LPO, RPO, HRO, MBPO

In the present scenario where activities of various nature are being outsourced to India from various parts of the world, different activities are being assigned a common word i.e. Knowledge Process outsourcing (KPO). But the word has definite connotation and cannot be used for all kinds of the activities. We are trying to define different forms of outsourcing activities and to show how these are different as well parts of KPO but are definitely not BPO activities.
Difference between KPO and BPO, LPO, RPO, HR and MBPO. To understand this let us try to understand what we mean by BPO, LPO, RPO, HR and MBPO.

What does BPO stand for? What does it mean?
BPO stands for Business Process Outsourcing. Major corporations in the US and Europe are outsourcing their back office operations to India to save costs. e.g. employee payroll, data entry, voice calling for back end activities etc. Although these jobs usually are not directly IT-related, their data-based orientation often means that they require IT departmental support to be successfully outsourced.

What is LPO?
There is a new addition to the BPO family — legal process outsourcing or LPO. When it began, LPO consisted mostly of low-end transcription work, but no longer. LPO now includes a huge range of legal processes, such as patent application drafting, legal research, pre-litigation documentation, advising clients, writing software licensing agreements and drafting distribution agreements. The off shoring of U.S. legal jobs is already ramping up, as some experts predict that 79,000 lawyers' jobs are poised to move from the U.S. to countries like India by 2015.

What is RPO?
RPO stands for Research Process Outsourcing. This is popular in the biotech industry. Clients outsource their R&D work. This was termed reportedly by India's biotech queen Kiran Mazumdar-Shaw.

RPO also stands for Recruitment Process Outsourcing. RPO is a key component of Human Resource Outsourcing (HRO). The RPO team basically handles all the recruitment.

What is HRO?
HRO stands for Human Resource Outsourcing. HR is getting outsourced to third party providers who can bring in the benefits of knowing the domain.

HR as an activity, it comprises of a group of activities, which include payroll management, training, staffing, benefits administration, travel and expenses management, retirement and benefits planning, risk management, compensation consulting, etc. These activities are outsourced by which the client can concentrate on their core competency.

In the US context, HR outsourcing is a huge area. For instance, nearly about 29-30 per cent of the outsourcing space is HR.

What is MBPO?
MBPO stands for Medical Business Process Outsourcing. Apollo Hospitals is the first major hospital to be getting into this.

What is Procurement BPO?
Procurement BPO is transfer of management and execution of one of more procurement activities, transfer of the entire procurement sub-segments or transfer of the entire procurement business functions to an external provider. It offers increased productivity, cost reduction and business transformation to the client. It has a market potential of $10 billion by 2006.

Scope and Future of Knowledge Process Outsourcing
The future of Knowledge Process Outsourcing (KPO) business in India presents an encouraging picture to rejoice for everybody in the country. Not only the scope of business opportunities shall give endless area for businesses to explore but also shall create lacks of jobs for the large amount of the talented and skilled workforce of engineers, MBAs, doctors, lawyers and other professionals having skill in the core areas and computer knowledge.

We give below data published and prepared by various organizations which give a broad idea about the amount of the scope of business opportunities and potential likely to be created in the KPO sector in the immediate and long term future.

1. National Association of Software and Services Companies Study Report (NASSCOM):
According to a published report of National Association of Software and Services Companies (NASSCOM), the chamber that serves as an interface to the Indian Software industry, Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India. Another report predicts that India will capture more than 70 percent of the KPO sector by 2010. Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also expected to join the KPO industry. In its annual publication Strategic Review 2005, Nasscom has said the high-end activity of the BPO industry—the KPO or knowledge process outsourcing could be worth $15.5 billion by 2010.According to earlier estimates, the BPO industry itself was expected to be about $20bn by 2008, hence a very significant portion of the sector—in excess of 50% is now projected to be knowledge based. This represents significant shift of call center sector business to different model.

2. Evalueserve Study
According to a recent study by “Evalueserve, an outsourcing company having service chart for global world, the global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent, from $1.2 billion in 2003 to $17 billion in 2010. Compare this with the prediction for the low-end outsourcing services market. This is expected to have a CAGR of 26 per cent, from $ 7.7 billion to $39.8 billion in the same period.

Evalueserve says India provided $3.5 billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of 36 per cent during 2004 to 2010. Hence, it is likely to earn $30 billion in 2010 by providing these services. Says country general manager, Kelly Services, Achal Khanna “India still maintains the competitive advantage for providing, the combination of the most cost-effective and high quality manpower- this is India's strength in the off-shoring business”. The projections are based on a white paper released by Evalueserve. The paper cites reasons for a possible KPO boom. It says higher savings by outsourcing knowledge based activities combined with the scarcity of specialized talent in developed countries could lead to growth in the KPO sector. Billing rates for KPO are higher at $30-45 per hour compared to just $10-14 in the BPO business. However, the paper also warns of several challenges like higher quality standards, greater investments and inadequate talent. The study estimates that while the compounded growth rate of BPO till 2010 would be just 26% KPO is expected to be grow at almost 46%.

3. Rocsearch, a UK-based research services company Study
Another study on Knowledge Process Outsourcing (KPO) sector shows a huge supply gap that threatens to cripple its growth. Rocsearch, a UK-based research services company, has gathered evidence suggesting that the KPO market may just about reach a size of $5 billion by 2010, manned by 100,000 people instead of projections of a $12 billion market supported by 250,000 employees.
This accentuates Nasscom's projections of a shortfall of 500,000 workers in ITES and BPO sectors by 2010. Assuming an average revenue per person of $55,000 over the next four years, 100,000 knowledge workers point to a $5 billion market. This size, though based on a CAGR of 32%, is still 60% less than the $12 billion potential projected by big KPOs, like Evalueserve, last year. Rocsearch COO, Ashish Sinha says the sector is restricted by low employability despite high graduate turnout, and competing demand from other sectors as jobs grow faster than the workforce.
For example, all the 2,000-odd IIM and top 10 B-School graduates are employable, while less than half the 84,000 graduates from Tier-II B-Schools would make the grade. The study sees only 500,000 of the over 3 million workers added to the labour pool in 2005 as employable in global firms and of these, just 2 in every 100 are likely to opt for work in knowledge space.

In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Processes Outsourcing, Web Development Application, CAD/CAM, Finance and Accountants Management and Consultancy, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO), etc.

GLOBAL TRADEMARK REGISTRATION TOUCHES A MILLION:

Drishya Subash
TRADEMARKS ARE THE EXTREMELY VALUBLE COMMERICAL ASSETS AS FAR AS A BUSINESS FIRM IS CONCERNED. THE FIRST INTERNATIONAL TRADEMARK WAS REGISTERED IN 1893 , MORE THAN A CENTURY BACK, AND IT WAS BY A SWISS CHOCOLATE – MAKER NAMED RUSS – SUCHARD AND CO. THE INTERNATIONAL TRADEMARK REGISTRATION TOUCHED THE ONE MILLION MARK THIS MONTH[ ie, 2009 MAY] . AUSTRALIA – BASED GRUNE ERDE, WHICH SPECIALISES IN NATURAL WOOD, TEXTILE AND COSMETIC PRODUCTS, BECAME THE MILLIONTH INTERNATIONAL TRADEMARK OWNER.

THESE TRADEMARKS ARE REGISTERD BY AN ORGANIZATION CALLED “WIPO” – THE WORLD INTELLECTUAL PROPERTY ORGANIZATION, GOVERNED BY UN.TRADEMARKS AND THE BRANDING EFFORTS HELP CONSUMERSMAKE INFROMED CHOICES ABOUT THE PRODUCTS THEY BUY. THE TRADEMARKS ARE REGD: AT WIPO UNDER ITS “MADRID SYSTEM” FOR THE “INTERNATIONAL REGISTRATION OF MARKS”.THIS SYSTEM OFFERS A TRADEMARK OWNER THE POSSIBILITY TO HAVE HIS TRADEMARK PROTECTED IN SEVERAL COUNTRIES BY SIMPLY FILING ONE APPLICATION DIRECTLY WITH HIS OWN NATIONAL OR REGIONAL TRADEMARK OFFICE.

WIPO’S INTERNATIONAL TRADEMARK REGISTRATION SYSTEM IS A COST- EFFECTIVE, USER FRIENDLY STREAMLINED MEANS BY WHICH BUSINESS OPERATING INTERNATIONALLY CAN PROTECT AND MANAGES THEIR TRADEMARK PORTFOLIO.

THE INCREASINGLY RAPID GROWTH OF THE MADRID SYSTEM OVER THE LAST TWO DECADES REFLECTS THE INCREASED INTERNATIONALIZATION OF TRADE AND BORDER RECOGNITION OF THE COMMERICAL IMPORTANCE OF TRDEMARKS.AND THE GROWING NUMBER OF REGISTRATION REFLECTS AN INCREASING AWARENESS AMONG THE GENERAL PUBLIC AND THE BUSINESS COMMUNITY.