Knowledge Process Outsourcing (KPO) is a form of outsourcing. It can be said that KPO is one step ahead of Business Processing Outsourcing (BPO). KPO firms provide domain-based processes and business expertise, rather than just process expertise.

Due to a large knowledge pool and a significant cost arbitrage, few countries like India, Philippines and China are front runners in providing these services. The nature of work demands advanced analytical and specialized skills.

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.

Challenges

Though the future appears quite bright, there are also a few challenges which KPO companies face. These include:

• High attrition rates
• High cost of training
• Ensuring information security and confidentiality

Future Outlook

According to a report 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, 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.

The high-end KPO opportunities are immense for Indian firms. For instance, look at some of the figures pertaining to intellectual property research.

Market research firms are also increasingly outsourcing their acitivities to countries like India and Eastern Europe. Market research KPO (Market research KPO ) is a growing market in the KPO industry. Knowledge process outsourcing