Knowledge process outsourcing

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Knowledge process outsourcing (KPO) describes the outsourcing of core information-related business activities[1] which are competitively important or form an integral part of a company's value chain.[2] KPO requires advanced analytical and technical skills as well as a high degree of specialist expertise.[3][4]

Reasons behind KPO include an increase in specialized knowledge and expertise,[1] additional value creation,[3] the potential for cost reductions, and a shortage of skilled labor.[1] Regions which are particularly prominent in Knowledge Process Outsourcing include India, Sri Lanka, and Eastern Europe, especially Poland, Romania, and the Baltic States.
KPO is a continuation of Business process outsourcing, yet with rather more of business complexity. To be successful in Knowledge process outsourcing, a lot of guide is required from interorganizational system.[5]

Types of KPO[edit]

KPO services include all kinds of research and information gathering, e.g. intellectual property research for patent applications; equity research, business and market research, legal and medical services; training, consultancy, and research and development in fields such as pharmaceuticals and biotechnology; and animation and design, etc.[6]

Importance of KPO[edit]

The developing rivalry has brought about shorter time to market cycles, and clients are getting to be more requesting regarding quality. This has constrained the firms to give operational proficiency and increase the value of their products and services. The customer can launch an item quicker and get to the market immediately. A company can lessen the complexities included in overseeing and constantly constructing information in an extensive pool of human resources.[7]

Risks and Benefits of KPO[edit]


  • Cost reduction
  • Shortage of skilled employees
  • Provides many graduates at very low cost
  • High end services are provided at a lower cost to decrease unemployment and benefit their economy
  • Provide flexibility in terms of HRM & time management


  • Security- Classified information about the company can be lost
  • Key talent retention
  • The character of the employee and the quality of the work cannot be assured
  • KPO is time consuming and cannot provide a quick fix to the company seeking immediate results.
  • Lack of communication between partners due to legal, language and cultural barriers can lead to complications

Differentiating KPO from BPO[edit]

A KPO firm requires considerably more skilled personnel. Experts working in KPO keep on learning and accomplished professionals can power their aptitude to produce more incomes for the KPO firm.[9] The main difference between a KPO firm and a BPO firm is that in a KPO firm, the customer is included amid the whole execution process.[7]

Who coined the term?[edit]

Out of all those who say they coined the term, Ashish Gupta, COO of Evalueserve has the best claim. Several published authors have credited him for coining the term in their works.[citation needed]

In India[edit]

India has a large number of post-graduates, PhDs and MBAs who are involved in KPO. Taking advantage of this ability, it grants overseas organizations to increase better quality services at practical costs.[10]
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 billion.[11] The year before, 2005, it had been $1.3 billion, with Evalueserve predicting that by 2010 it would be some $10 to $15 billion.[12] The Indian government was predicting that by 2010 India would have 15% of the global KPO market.[13] However, the global financial crisis, coupled with domestic economic problems such as the IPO of Reliance Power in 2009, caused people to re-evaluate these predictions, incurring worries that India's IT, BPO, and KPO sectors — which by then, combined, were $8.4 billion in export revenues — would be greatly affected by these factors.[14] The worldwide KPO industry is expected to reach about US $17 billion by 2015, of which US $12 billion would be outsourced to India. Furthermore, the Indian KPO area is likewise anticipated that it will utilize more than 2, 50,000 KPO experts by 2015.[15]

Challenges faced by KPO in India[edit]

The KPO area has a considerable measure of potential for development in India. But India confronts various difficulties to secure itself as a worldwide KPO pioneer. The real test in setting up a KPO will be to obtain skilled employees. KPO organizations include high risk and confidentiality and the greater part of the work would be outsourced from the US. The area likewise obliges larger amount of control, confidentiality and enhanced risk management.[16] Moreover, legal language and cultural barriers can result in genuine issues. Both organizations need to appreciate each other's corporate and national societies and find common helpful approaches to create successful participation.[17]

In Eastern Europe[edit]

Although India has traditionally been a KPO destination for North American, British, and Australian companies, an increasing number of European companies are looking to Eastern Europe, especially the Baltic countries, to satisfy their KPO needs.[18]


  1. ^ a b c "The benefits and risks of knowledge process outsourcing". Ivey Business Journal. May–June 2010. Retrieved 2012-03-20. 
  2. ^ "Sourcing cheaper staff the new groth industry". The Sidney Morning Herald. 2012-01-28. Retrieved 2012-03-20. 
  3. ^ a b Mierau, Alexander (2007-01-17). "Strategic Importance of Knowledge Process Outsourcing" (PDF). Technical University of Kaiserslautern. Retrieved 2012-03-20. 
  4. ^ "Now, BPO moves up the value chain". The Economic Times. 2005-08-17. Retrieved 2012-03-20. 
  5. ^ "Knowledge process outsourcing". Ghosh, Biswadip, ACIS 2009 Proceedings Paper 52. 
  6. ^ Sornarajah & Wang 2010, p. 280.
  7. ^ a b Vijay Kumar Kaul 2011, p. 150.
  8. ^ a b "Outsourcing Its Benefits, Drawbacks and Other Related Issues". Prasad Kakumanu and Anthony Partanova, Journal of American Academy of Business, Cambridge. 
  9. ^ "How does KPO differ from BPO" (PDF). 
  10. ^ "Knowledge Process Outsourcing: India's Emergence as a Global Leader". CCSE Asian Social Science. p. 85. 
  11. ^ Contractor, Kumar & Kundu 2010, p. 53.
  12. ^ Mehrotra 2005, p. 46.
  13. ^ Basu 2009, p. 80.
  14. ^ Varadarajan 2010, p. 145–146.
  15. ^ "SEIS Journal of management" (PDF). p. 86. 
  16. ^ "Challenges for Indian Companies in the Financial Services KPO Business" (PDF). 
  17. ^ S.Venkatesh. "Emergence and Potential of Knowledge Process Outsourcing in India" (PDF). 
  18. ^ "Outsourcing market in Eastern Europe heats up" Oct. 17, 2012.


  • Basu, Sudip Ranjan (2009). "The economic growth story in India: past, present, and prospects for the future". In Klein, Lawrence Robert. The making of national economic forecasts. Edward Elgar Publishing. ISBN 978-1-84720-489-9. 
  • Mehrotra, Nitin (2005). Business Process Outsourcing — The Indian Experience. ICFAI books. ISBN 978-81-7881-576-3. 
  • Sornarajah, Muthucumaraswamy; Wang, Jiangyu (2010). China, India and the International Economic Order. Cambridge University Press. ISBN 978-0-521-11057-0. 
  • Contractor, Farok J.; Kumar, Vikas; Kundu, Sumit K. (2010). Global Outsourcing and Offshoring: An Integrated Approach to Theory and Corporate Strategy. Cambridge University Press. ISBN 978-0-521-19353-5. 
  • Varadarajan, Latha (2010). The Domestic Abroad: Diasporas in International Relations. Oxford University Press. ISBN 978-0-19-988987-7. 
  • Kaul, Vijay Kumar (2011). Business Organization and Management: Text and Cases. ISBN 9788131754498. 

Further reading[edit]