Knowledge Process Outsourcing: Helping Manufacturers Compete in India and China

Anita LaFond – 3/31/2006 7:12:00 AM

U.S. companies looking to open manufacturing centers in India and China must develop relationships with foreign service providers in order to reap the best advantages for their overseas operations. This is much easier for bigger companies (such as the Fortune 1000 organizations) than it is for small- and mid-sized companies who do not have ready access to resources and contacts in foreign countries.

To help alleviate these problems, a new type of outsourcing service has been springing up - Knowledge Process Outsourcing, also known as Knowledge Outsourcing. The services offered can include engineering file conversion (2D-to-3D CAD/CAM/CAE), healthcare claims processing, commercial mortgage processing, cost tracking, data management, and offshore recruiting.

One company providing such services is Sumpraxis, Delray Beach, FL. According to Joseph Collard, CEO of Sumpraxis, his organization brings together offshore providers with U.S. companies who need their services. "Increasingly, as U.S. companies become involved with manufacturing operations in India or China, they need to document parts or reverse engineer models or convert 2D files to 3D," said Collard. "But where can these companies go to get the expertise they need? It is not always feasible or economical to bring American engineers to India and China, and in many cases, the skilled labor is not available in the U.S."

Due to the shortage of skilled engineers in the U.S., there are not enough engineers to do the jobs needed here, which compounds the problem for U.S. manufacturers looking to set-up operations in India or China. "As an example," continued Collard, "of the 400,000 students in China, 80% are in engineering programs and many of these are graduating at the PhD level. Sumpraxis can help an American company find the Chinese engineer with the unique capabilities to match their needs."

Outsourcing has come to be associated with the moving of manufacturing or office service jobs overseas. But this is not always the case. Many manufacturers are finding it to be more economical to keep manufacturing operations here in the U.S., while outsourcing engineering functions to India or China. Using Knowledge Process Outsourcing services can help U.S. manufacturers in India or China reduce operating costs, minimize risk and accelerate time to market for transaction processing, engineering support and financial services.

Especially for small- and mid-sized companies, it can be difficult to get access to the products and services they need to set-up operations in a foreign country. "Although a U.S. company might have good management expertise in this country," said Collard, "when faced with working in a foreign environment, they might not have the international expertise needed. Cultural and language differences can cause many roadblocks when trying to set-up a foreign office."

There is a great demand for new technology and products as the economies of India and China develop. American companies, once they are established in these countries, will find a ready market for their products and services.