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In the past few years, the KPO (Knowledge Process Outsourcing) business has gathered momentum. Consider the figures: The Indian ITES-BPO segment continued to chart strong year-on-year growth at 37 per cent for FY 2005-06. According to industry experts, India should see a sustained, ongoing 30 per cent growth rate in the next five years.
According to a NASSCOM-McKinsey Report, the BPO (non-IT) opportunity for 2008 is $ 141 billion.

While the industry is stated to be fragmented, employing around 25,000 people in India at present, by 2010 this number is likely to grow to 2,50,000.

KPO is not just about 'Cost Arbitrage'

The goal of KPO goes beyond simply cost-savings although the projected savings could total a significant 40 per cent to 70 per cent to more global implications enabling clients to obtain access to world class talent across the world and gain entry points to serve new and broader markets. Currently, India performs the widest range of KPO activity, especially in the areas of finance and accounting, and comprises 80 per cent of KPO performed worldwide. The financial services industry is responsible for more than 60 per cent of the KPO performed in India and KPO services, although in the beginning stages, have expanded to other industries such as banking, insurance, marketing and research, and legal services. Firms in the financial, banking and insurance industries were early adopters of KPO, for high-end analytical work.

Based on existing security concerns, many companies prefer to keep knowledge processes that include core intellectual property and sensitive data in house. Therefore, most knowledge processing leads to captive, or company-owned, offshore operations or the in-house offshore development center of a company, opposed to utilizing third party vendors, because they potentially provide enhanced competitive advantage protection and help build institutional knowledge for future expansion. In addition to captives, pure-play KPO firms and established BPO players that are expanding their offerings to include KPO make up the KPO industry.

India Retains the Crown on IT Offshore Offshoring

Why Outsource Data Processing and Software Development to India? Just as the Gulf has its natural resources in crude oil and South Africa in diamonds, India's natural resource lies in its abundant technically-skilled manpower. India is the world's second largest exporter of software (after the U.S.), and is the source of management and technical talent for over 40 per cent of new start-ups in Silicon Valley.

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Deepak Bisht is currently working as Senior Business Analyst with MarketRx (a Cognizant company) - one of the leading KPOs based in Gurgaon, India. Prior to this, he worked with HP Analytics, Bangalore, as an Analytics Consultant for one of HP GBUs.