Knowledge Process Outsourcing KPO

Knowledge process outsourcing (KPO) is a form of outsourcing, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans.

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 favorable 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.


What high-end services can be outsourced to the Indian KPO sector?

Here are some KPO services that can be outsourced to India :

  • Research & Development
  • Business and Technical Analysis
  • Learning Solutions
  • Animation & Design
  • Business & Market Research
  • Pharmaceuticals and Biotechnology
  • Medical Services
  • Writing & Content Development
  • Legal Services
  • Intellectual Property (IP) Research
  • Data Analytics
  • Network Management
  • Training & Consultancy

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.

Challenges to providers

In addition to the challenges faced by clients, KPO companies themselves have challenges:

  • High staff turnover, especially where work is not challenging to the employee's skills
  • High cost of training and tendency to lose the most experienced employees to the clients
  • Ensuring the security and confidentiality of information, especially when privacy laws vary from country to country


Creating the climate for success in India

The responsibility of setting up successful KPOs in India ultimately belongs to the India-based business units that can effectively serve the global market. PricewaterhouseCoopers has identified four possible scenarios for the creation of KPO service providers:

  • The well-established IT and BPO companies will move up the value chain and diversify into KPO;
  • Companies currently serving specific vertical markets in India could choose to begin offering their services globally;
  • Multinational companies may form captive units in India whose staff belong to global teams within various functional units; and
  • New companies may be formed by Indians with very specialized skills and international work experience to provide services exclusively to the global market.

Irrespective of how they are formed, these business units should aspire to go all the way to create India-based expertise that produce tangible business benefits for the organizations they support within a short time frame.

They need to able to recruit, train and retain highly talented team members and be effective in moving them up the value chain.

Sources and References:

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If you are working with a KPO, please let us know more about KPO by posting a comment on the blog.


Santosh Puthran

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