Processing Knowledge

Benoît Mandelbrot is widely known for his mathematical analysis of chaos and complex systems. In this book, “The Misbehavior of Markets“, he wrote “Bit by bit, from a bad seed a big but sickly tree is built with glue, nails, screws and scaffolding. Conventional economics assumes the financial system is a linear, continuous, rational machine and these false assumptions are built into the risk models used by many of the world’s banks. As a result, the odds of financial ruin in a free global market economy have been grossly underestimated. By using such methods there is no limit to how bad a bank’s losses can get. Its own bankruptcy is the least of the worries; it will default on its obligations to other banks – and so the losses will spread from one inter-linked financial house to another. Only forceful action by regulators to put a firewall round the sickest firms will stop the crisis spreading. But bad news tends to come in flocks and a bank that weathers one crisis may not survive a second or a third.”

Such views are not only being shared by financial analysts and bloggers but are also being activelt written by columnists. All of them converge on one point that the greed and myopic vision of the visionaries heading the large financial institutions coupled with false assumptions made in their mathematical models are the root cause of the current financial chaos. It is sad that this behavior was made publically available half a decade ago but was largely neglected due to the apathy and laziness of some economists.

Infosys MD S Gopalakrishnan was quoted saying, “We are looking at back office functions where the companies perform very unique services with their own platform or intellectual property”.  He further went on to say, “There are opportunities in traditional BPOs as well and we are not restricted to KPOs. Captives in banking and financial services, manufacturing, and telecom are still considered hot property”.

Why are these KPOs in great demand?

Leading KPOs such as S G Analytics have over the years been highlighting the potential of the untapped resources in our country, especially the talent pool in the area of financial research. Every year a large number of highly qualified mathematicians and business graduates pass out from some of prestigious institutes, however a large pool of this talent is yet to be tapped by the industry. The time constraints in carrying out cumbersome tasks are a boon to the KPO industry especially those working in the financial sector.

These KPOs have mastered the art financial research and to a few financial researchers, they are to the financial industry what pipeline assembly was to the Ford Motor Company before the second world war.

What do these KPOs offer to their clients ?

A wide range of services including, Financial Research, Sector Research, Fund Analysis, Thematic Research and Fund Administration are offered by the KPOs. As in the case of any service industry, most ofhese services are customer centric, however a few processes may be common across the customers.