Knowledge process outsourcing (KPO) describes the outsourcing of core information-related business activities which are competitively important or form an integral part of a company's value chain. KPO requires advanced analytical and technical skills as well as a high degree of specialist expertise.
Reasons behind KPO include an increase in specialized knowledge and expertise, additional value creation, the potential for cost reductions, and a shortage of skilled labor. Regions which are particularly prominent in Knowledge Process Outsourcing include India and Eastern Europe.
The Indian National Association of Software and Service Companies (NASSCOM) estimated the total market size of the KPO sector in India in 2006 to be $1.5 billions. The year before, 2005, it had been $1.3 billions, with Evalueserve predicting that by 2010 it would be some $10 to $15 billions. The Indian government was predicting that by 2010 India would have 15% of the global KPO market. However, the global financial crisis, coupled with domestic economic problems such as the IPO of Reliance Power in 2008, caused people to re-evaluate these predictions, incurring worries that India's IT, BPO, and KPO sectors — which by then, combined, were $8.4 billions in export revenues — would be greatly affected by these factors.
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