IRO ≠KPO

Much has been written about the burgeoning Knowledge Process Outsourcing (KPO) market.  Yet, white papers and best practices on Investment Research Outsourcing (IRO) are rarely available. In our weekly blogs, we share our thoughts on IRO specialization. This week, we outline three key reasons why IRO may differ from the traditional KPO business models.

Short product turnaround/project shelf life: A traditional KPO project typically lasts  a few  months at least, resulting in a large client deliverable or product result. In sharp contrast, an IRO project is a week or two at the maximum, with lower shelf life before investment changing news changes its current value. Therefore, (1) numerical accuracy, (2) overall presentation, and (3) differentiation of the research product often becomes more paramount in an IRO setting, compared to design efficiency or thoroughness.  Conclusion: actual Wall Street experience and project management becomes highly valuable compared to an engineering based or typical IT based project management.

High Frequency of Client-IRO Provider Exchanges: Often, the best IRO projects  involve a high frequency of client provider exchanges, even within the critical short project timelines. While the clients may actually be busy in their investment world on other higher priority projects, IRO providers need to ask the right, thoughtful but brief investment questions to engage the client and “raise the bar” of the completed project. Such pro-active work often produces the best client satisfaction. Often, project mission, direction and priorities can change for the better on such intellectual exchanges. Conclusion: Proper qualification and training of personnel is paramount in this client setting. This can indeed provide the much needed differentiation in today’s investment research product even in an IRO setting.

Client Reputation and Emphasis on Security/Confidentiality: IRO involves an implicit understanding of the high client reputation damage risk in the event of vendor inaccuracies or breach of confidentiality. The IRO product delivered is a visible, readable result or report that both clients and clients’ clients (top decision makers) access. Therefore,  IRO vendors at middle management and analyst levels also need to fully understand the end use of their services in their client product and the damage caused by poor quality. In the initial stages, the client often engages in a thorough checking and re-checking of IRO delivered product. The lesser overall re-work and the higher understanding of client’s reputation damage will result in the highest quality product. Often, the client feedback loop is not closed upon project completion. Conclusion: Dispersed day-to-day project management of multiple projects/clients in distant geographical regions often compromises quality and understanding of client end use. Lack of Wall Street experience and/or training of project purposes also results in poor client satisfaction.

IRO is our sole focus: At ValAn Global Solutions, we understand these subtle differences and broader KPO type vendor categorization can cause a large deviation in an investment research client’s satisfaction level. We aim to differentiate ourselves through (1) active US based project management, (2) rigorous training and (3) proper employee education/qualifications.  Please let us know how we can help you further.