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What is Knowledge Process Outsourcing (KPO)?

Updated on April 15, 2013

Knowledge Process Outsourcing -Revolution of the Day

An investment in knowledge pays the best interest.- -Benjamin Franklin

Knowledge is power. Any work done without proper knowledge has the possibility of resulting in failure. Knowledge provides the power, precision and confidence in performing any task to attain the desired result. As such, one could say that Benjamin Franklin got it absolutely right.

Outsourcing can be simply defined as an agreement or a contract between a firm and a third party organisation to provide the concerned firm with a specific service. Outsourcing is of different types such as

  1. Business Process Outsourcing (BPO)
  2. Account Process Outsourcing (APO)
  3. Recruitment Process Outsourcing (RPO)
  4. Knowledge Process Outsourcing (KPO) etc.

Outsourcing provides the firm with various benefits including cost reduction, efficient production, quality assurance, business flexibility and so on.

After BPOs, it's KPOs now

Knowledge Process Outsourcing (KPO) is the new face of outsourcing. It refers to the core value added processes chain which depends on the proficiency, domain knowledge and experience of skilled experts. These processes involve advanced information search, analysis and interpretation as well as major decision-making. Globally, the Information Technology (IT) and Information Technology Enabled Services (ITES) revolution has bought about the huge wave of outsourcing – initially business and now knowledge.

While BPO is mostly about the volume and efficiency of operational and managerial tasks, KPO concentrates on knowledge, analysis and expertise. However, the scope of KPO is not restricted to the IT industry. It defines all kinds of research and information collection. To name a few, it includes

  1. Bbusiness and market research
  2. Equity research
  3. Patent application research
  4. Legal and medical services
  5. Animation
  6. Design consultancy
  7. Training, research and development in different fields of science. etc...

Knowledge Process Outsourcing or KPO, as it is commonly known today, is not merely the outsourcing of business deals involving research and analysis. Rather it is the platform where a vast amount of knowledge assimilates to create something with specialised skills, expertise and above all, a strong foundation. It is an information-driven concept upholding core competency. KPO is the outsourcing of core processes that require high-end knowledge and advanced skills.

By the help of a computer network KPO workers are useful for the sectors like

  1. Banks
  2. Industries
  3. Market researchers
  4. Planning department of big companies
  5. Television channels
  6. Newspapers etc.

Like this many big companies for KPO deals have reached global . Many companies like

  1. Royters
  2. McKenzie
  3. AC Nilsson
  4. Ebsos
  5. IMS Health
  6. Harris inter active

etc have use the KPO services . Some KPO workers should have IT knowledge is important but for some workers should have knowledge in that subject. These two factors will help to hold up in this field.

Futre of KPO - Opportunities in KPO

An explosive increment can be witnessed in this sector in the recent years predicting growth of $10 - $17 billion (USD) out of which the lion’s share is directed to India. According to the study of NASSCOM (National Association of Software and Services Companies), within two years, processes worth $141 billion (USD) will be outsourced across the globe.

Out of this, approximately $20 billion (USD) will amount to the KPO sector ensuring opportunities for more than 2.5 million professionals. Another report predicts that India will capture more than 70 percentage of the Knowledge Process Outsourcing deals in the coming few years. The deals coming to India concentrates mostly on Biotechnology, Electronics, and Finance etc.

Availability of IT experts, English Knowledge, workers with knowledge in different subjects, Experience, etc these all are the factors for the great achievements in the BPO industry.

Different Categories of KPO Vendors

KPO vendors can be divided into the following four categories:

  1. Off-shore vendors
  2. Near-shore vendors
  3. On-shore vendors
  4. Captive vendors

Off-shore vendors are located in outside places, concentrating in countries like India and Singapore. Countries like Chile and Mexico are called near-shore vendors having the advantage of time-zone relativity. T

hey are quickly becoming preferred locations also due to their English language capabilities, shorter travel times, cultural similarities and political stability. Captive vendors are those which are company-owned and are operating abroad.

For example, large management consulting companies own operations in India which cater to their KPO requirements. On-shore vendors are those KPO vendors who operate in the same country as their client. The increase in the number of contract cancellations is forcing many companies to depend on on-shore vendors not only to improve service levels but also to synchronize language and culture.


Even though KPO comes with a number of external and internal risks, it has accepted all the challenges and is determined to leave a mark. In this scenario, it is indeed evident that the success of a business lies in the proficient research, gathering, analysis, judgement and application of knowledge. To maximize attaining the objectives, it is best to follow what Randall Jacobs said.

“There is no substitute for accurate knowledge. Know yourself, know your business, know your men.”


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