Companies choose to tap into KPO companies mainly to lower operating costs and so look to outsource in developing countries India, the Philippines, China, Pakistan, and other Asian countries. In utilizing an offshore solution, companies can save on expenses like finding new employees and recruitment in general, training, human resource management, infrastructure, and equipment. Companies can also save on energy and salary costs. Investing in a KPO Philippines or India-based company can greatly increase a company’s profit margins while still maintain a high quality of service.

There are advantages and disadvantages to taking up KPO companies based in different countries. As mentioned, there are several key offshore locations around the world that cater to specific niches. For example, several countries can provide low cost IT professionals. KPO Philippines, China, Ireland and India-based companies have different salary ranges for their IT services. While Ireland can offer the highest English proficiency and present the best near-shore location, the relatively high salary bracket for the country’s IT professionals (around USD 25,000 to 35,000 per year) can be a bit expensive for companies looking to cut costs. China, on the other hand, can give 24/7 support and low cost manpower but a low proficiency in English and differences with Western cultures are downsides to an otherwise extremely favorable location. The leader in the offshore IT KPO industry is India, which produces a large pool of English-proficient IT graduates a year; India built infrastructure and created Software Technology Parks to more effectively cater to their clients.

Companies in the KPO Philippines industry can tap into a large pool; the country produces a huge number of IT graduates (more than 300,000) every year, most of them proficient in English. The Philippines is culturally compatible with the West, as well as has Special Economic Zones (SEZs) for companies, though the country also has a lack for IT training in general. Countries that wish to be competitive in the KPO and BPO industries will need to concentrate on training to supply the demand for highly skilled and experienced manpower. Governments will need to offer friendly policies and export tax exemptions as well to draw in more clients. Companies looking to outsource also look into other important factors when choosing the country from which to outsource their manpower, including political stability and infrastructure, among other things.

Choosing to get services from a KPO Philippines, India, or China-based company depends mainly on a company’s needs and preferences. At any rate, choosing to capitalize on a KPO service provider can both save money and provide a large talent pool for companies looking to expand their business.

The National Association of Software and Services Companies (NASSCOM), an organization that represents the Indian software industry, released a report indicating that the KPO industry will reach around USD 17 billion this year, KPO India based companies enjoying more than 70 percent of the global market share. The report also indicated that the other countries expected to join the KPO industry includes China, Russia, Ireland, Israel, and the Czech Republic. Also, NASSCOM predicted that most business process outsourcing will become knowledge-based, a significant shift from process oriented to knowledge and expertise oriented business processes.

Evalueserve, a knowledge process outsourcing company, conducted a study predicting that the global KPO industry will grow from USD 1.2 billion in 2003 to USD 17 billion this year while the low-end outsourcing services market is expected to grow from USD 7.7 billion to USD 39.8 billion. KPO India based companies were lauded in the same study as the ones that provide high quality manpower at the most cost effective prices. The Evalueserve white paper also noted the difference between the salary ranges of those in the BPO industry and KPO service providers. Evalueserve foresees a boom in the KPO industry brought about by a lack of specialized manpower in developed countries – the kind of specialized talent they can get offshore at lower costs.

Outsource2India, a Bangalore-based outsourcing company, reports that recently the process outsourcing industry has been focusing more on getting skilled professionals like doctors, engineers, accountants, and architects into talent pools. According to the report, the BPO industry has evolved from data entry and call center jobs to more specialized areas that require skills, expertise, and experience. KPO Indian based firms can capitalize on knowledge based projects like intellectual property research which is rather expensive in the United States. According to the study, outsourcing a portion of the patent drafting and filing process can save a lot of money for companies who rely heavily on innovation and new inventions.

Outsource2India also indicated that KPO India based companies can profit from the amount of outsourced research and development, especially in pharmaceuticals and biotechnology. KPOs can also take advantage of the demand for skilled workers in other industries.

At any rate, it’s a win-win situation for both the KPO India based firms and companies looking to outsource some of their knowledge based processes. The KPO service provider generates income while the company can get quality service at a fraction of the price they would pay for in-house talent. Considering the enormous potential for growth and expansion, KPO India based companies will need to broaden their talent pools and maintain the high quality of service they already provide.

KPO differs from BPO (Business Process Outsourcing) in the sense that KPO is more specialized and arguably more complex. While outsourcing companies often focus on quantity, efficiency, and volume of work, KPO aims to provide high quality output with experienced and expert skilled workers. As the nature of KPOs’ work demands first-rate performance, recruitment and screening for employees is stricter and centers more on an applicant’s skill set, expertise, and experience.

There are several types of KPO services, mostly related to research and content. Knowledge-related services include accounting and bookkeeping, business consultation, creative writing, web content and design, intellectual property research, and legal process services, among others. As more industries open their doors to the idea of outsourcing some of their knowledge processes, companies that specialize in KPO then expand their employee pools to cater to their clients and to attract potential clients.

KPO business entities thrive in countries like India, the Philippines and China as those countries have a good number of skilled workers and professionals from different fields.

Benefits of KPO

Getting skilled, trained and experienced manpower can not only be expensive but also tedious for some companies. Working in partnership with a KPO company can dramatically reduce costs in training, technology, operations, and even recruitment as most KPOs handle those functions for their clients. Companies can track their outsourced manpower as closely as they need and ensure that quality is up to par with industry standards. Also, companies can expand or downsize their outsourced manpower with little trouble.

Outsourcing what normally would be in house services can increase profits by reducing costs, and save a company the management energy needed to support a larger workforce. Companies can expect products that are on time, of good quality, and relatively cheap. KPO service providers can easily adapt to changes in policy or quality demands, as well as provide uninterrupted service and adaptable schedules depending on the client’s needs.

Getting offshore outsourced accounting services, for example, can enable a company to downsize their accounting departments or do away with the entire department completely while still be assured of output quality and experience of the workforce. The KPO provider will be responsible for their teams’ training, recruitment and labor management costs so the company doesn’t have to deal with those costs.

Healthcare professionals and hospitals on the other hand can capitalize on medical transcription services. KPO companies that specialize in this type of business process hire professionals with medical backgrounds as well as train their employees in hearing different accents, medical terms, specialties, and other things to ensure the utmost quality and efficiency.

On the whole, KPO provides a great opportunity for companies to expand operations and cut operational costs while still maintain high quality output.

BPO vs. KPO

First off, KPO companies require skilled and experienced employees since the services they provide are much more complex than the relatively average work taken up by BPO companies. Where BPOs focus more on the volume and quantity of their production, KPO companies are geared toward producing high quality services and products. Also, companies would source their non-core processes to a BPO while KPO professionals tend to be given close to core duties that may come with some decision-making responsibilities as well.

Depending on the clients they serve, KPO companies may employ a wide range of professionals like engineers, doctors, writers, market analysts, and even animators to answer their clients’ needs. As a result of this higher skill requirement, KPO companies offer higher salaries compared to BPO companies.

Both BPO and KPO companies offer the same cost effective manpower solution to their clients; offshore operations are mostly cheaper since outsourcing capitalizes on the fact that some countries have a lower cost of living. Also, both outsourcing solutions offer clients a chance to expand their operations at lower costs and with little to no snags in terms of recruiting, screening, training, and managing manpower. Taking away the HR responsibilities and general workforce management also lowers cost for the client. Human resource management, training, equipment, and the manpower are usually shouldered by the BPO and KPO companies, charging their clients a flat rate for services rendered.

A BPO’s strength usually lies in the efficiency and its ability to clear out vast volumes of business processes while a KPO banks on its specialties, quality of service, and the level of expertise of its skilled workers. Some qualify accounting and bookkeeping, customer management, medical and legal transcription, and payroll processing as processes delegated to BPO companies while web content development, research and development, financial consulting, patent research and IP asset management, and animation are mostly entrusted to KPO companies.

KPO Destinations

Many US companies outsource greatly to counter rising energy costs, economic instability, and lower profit margins; the common destinations of companies looking to outsource are developing countries like India, the Philippines, China and other Asian countries like Pakistan. KPO companies can take advantage of each country having developed their own specialties. India, for example, produces several thousand IT graduates every year and continually develops their IT and telecom infrastructures to ensure reliability.

Other countries with potential to provide KPO companies with a good number of skilled workers are Russia and Canada. Russia has a lot of scientists and engineers though most of them don’t speak English. Canada, on the other hand, is politically stable, has good telecommunications infrastructures in place, and is ideal for software development KPO companies, though Canada has the highest IT salary out of the other countries that offer offshore services.

Research process services usually involve market research and analysis; companies that outsource their business processes usually outsource their research activities as well. Many companies from a variety of industries require such KPO services, such as banking and financial institutions, investment companies, pharmaceutical and biotechnology companies, and even engineering and architectural firms.

Along the same lines as research KPO services is investment market analysis. As investments and financial markets go, a problem with one economy can affect the rest of the world so businesses would do well to make informed decisions with updated information.  Specialized investment market analysis can also include risk reporting, risk simulation and testing, and risk identification as well as data gathering and verification, among other things.

Intellectual property research services are important for competitive companies that rely on creating and innovating new products. Companies need to maintain patent protection over important intellectual property assets. With IP research KPO services, companies can get information regarding existing inventions and research an invention’s originality, plus writing and proofreading patent applications.

Legal process services are offered by KPO companies; it has branched out to another kind of outsourcing called LPO (Legal Process Outsourcing). According to a Pricewaterhouse Coopers study, companies can save up to 44% when outsourcing legal services. Aside from the cost savings, companies can get the same efficient high quality service without sacrificing security. Law firms and corporate law departments can capitalize on these types of KPO services for drafting, editing, and reviewing legal documents, managing contracts, and preparation of standard litigation documents.

Medical transcription is the process of converting a recorded report dictated by a medical professional from audio to text format. KPO services like medical transcription rely on both the trained manpower and the electronic equipment used to get the job done. KPO service providers usually hire people with medical backgrounds and those knowledgeable in medical terminologies, disease signs and symptoms, while also skilled in specialties and accents. Companies can be assured of the quality of work since KPO companies also employ editors to ensure that the work is accurate.

KPO services also include software development and animation services. Companies big or small can benefit from outsourcing programmers and IT professionals to create software-based systems. Animators can also be outsourced to get cost savings while still get quality services and products.

Graphic design and development services are also included in some companies’ list of KPO services. This type of service include web design, design of a corporate logo, letter head and business cards, and even brochure, flyers, catalogs, greeting cards, and posters. Creative writing services can work hand-in-hand with graphic design for the creation of a company’s website. Creative writing KPO services can also include web content development, legal, medical, academic and business writing, copywriting, product and service description writing, and many other writing services.

While the global recession that hit the world’s biggest nations certainly has something to do with the cooling down of India’s knowledge process outsourcing industry, experts say there is more to this failure to launch than the widespread economic woes.

Martyn Hart, chairperson of UK’s National Outsourcing Association (NOA), says knowledge process outsourcing makes a lot of business sense and the benefits for companies looking into this are obvious.  When certain skills are very in short supply domestically, companies can access skilled workers at reasonable costs through knowledge process outsourcing.

Those companies dealing with knowledge process outsourcing services also stand to benefit from the increasing complexity of tasks, Hart wrote in Silicon.com. “The more complex and challenging the task, the more likely workers are to be mentally engaged – and thus the more able companies are to attract high-quality staff.”

However, despite the advantages of knowledge process outsourcing he said many companies continue to adhere to the so-called cardinal rule of off shoring: outsource only non-core business operations.

Knowledge process outsourcing’s predecessor, business process outsourcing (BPO), focuses on hiring third-party service providers to do business functions that are considered non-core to the primary business strategy. These include accounting and payroll, financial and administration, HR and employee benefits management, as well as call center and customer service activities functions.

On the other hand, knowledge process outsourcing, often considered to be a subset of BPO, includes activities that require greater skill, knowledge, education and expertise. Typically, knowledge process outsourcing encompasses R&D, intellectual property research services, software and product development, legal processes, healthcare and medical processes, quantitative analysis, e-discovery, as well as a number of other business functions that require the efforts of a more knowledgeable set of workers than non-core business functions.

Although the more developed skills and proficiencies required for knowledge process outsourcing to be successful are available, many companies hesitate to engage in these deeper kinds of business relationships for fear of giving too much sensitive company information away to knowledge process outsourcing firms, said Hart.

Protection of intellectual property rights (IPR) is of critical importances because knowledge process outsourcing services are more central to the business, according to Indy Banerjee, Director of Technology Partners International (TPI). Existing legal restrictions and licensing requirements may also prevent companies from sending out high-end critical services in an organization.

Another major issue that kept the knowledge process outsourcing sector from duplicating the success of the BPO industry is the inability of companies to transition to this new outsourcing model, Hart explained.  Knowledge process outsourcing is easier where there are existing higher-value service providers.

However, initiating new knowledge process outsourcing relationships is a much bigger and complicated process than setting up, say, an offshore data entry operation. Higher value services are often fragmented across functions and industries.  This makes it more difficult to break down knowledge process outsourcing services and package them into smaller, manageable segments, said Banerjee.

The governance time involved in knowledge process outsourcing can also increase quite significantly because of this, Hart explained. It can be jarring for companies that did not anticipate this aspect of knowledge process outsourcing.

Still, Hart remains optimistic about the future of knowledge process outsourcing.  An increasing number of traditional BPOs are either consolidating or moving up the value chain. If the global BPO market grows to $450 billion by 2012 as predicted by analyst NelsonHall, the prospect for up-selling specialized services is indeed very promising.

Now the recession appears to be fading out, the opportunities for companies to grow and enhance through knowledge process outsourcing look much more achievable, he said. All that is left is for knowledge process outsourcing service providers to keep pushing and end-users to work at overcoming their qualms. Advisors, analysts, associations and suppliers all have a part to play here; and though it is a long road, knowledge process outsourcing will make it in the end, according to Hart.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) shares Hart’s optimism, Provided a strong chain of qualified professionals is built, particularly in the field of biotechnology and nanotechnology, ASSOCHAM projects growth to reach $10 billion 2012.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

Today, the BPO and KPO companies that comprise the Philippine outsourcing space are expected to grow at least 26% from last year and is expected to return US $9 billion, compared to last year’s US $7.3 billion. Moreover, BPO and KPO companies comprising the outsourcing industry have collectively contributed to the industry’s impressive consistent growth of 15% every year for the past three years. BPO and KPO companies in the Philippines actually own 15% global market share, an impressive feat next to India’s 40%.

One of the Philippines’ core competencies lies in the local government, which continues to support the various BPO and KPO companies that comprise the Philippine outsourcing space by providing incentives for these companies. The Earth Times reports that these incentives include income-tax holidays, incentives under the Philippine Build-Operate-Transfer Law (BOT Law), essential off-site infrastructure facilities option to pay a special 5% gross income tax instead of all national and local taxes, permanent resident status for foreign investors and their immediate family members, employment of foreign nationals and assistance in the promotion of economic zones.

More than just incentives, BPO and KPO companies have largely benefitted from the country’s high number of graduates every year, with as much as 380,000 individuals entering the workforce to find a job. BPO and KPO companies in the Philippines expand by the thousands—adding at least a thousand new jobs every time they announce expansion in the Philippines’ many cities. Because of the undeniable success of the BPO industry in the country, BPO and KPO companies are looking to promote knowledge process outsourcing, the next wave of business process outsourcing as it goes up the value chain.

Knowledge process outsourcing or KPO has gotten much hype over the past couple of years but not everyone has jumped on the bandwagon yet, for several reasons—one reason being that organizations are yet unsure about how they will hand over their more important processes of their business. Nonetheless, KPO has been flourishing in the Philippines, where BPO and KPO firms have already put up shop and experienced massive success in the last ten years.

Today, the KPO companies in the Philippines are gaining exposure with several service providers being recognized by their clients globally. The KPO space in the Philippines include the creative process outsourcing service providers, KPO companies specialize in animation and game development industries, music and sound engineering, advertising, film, industrial design, architecture, comics, photography, publishing, writing and conceptualization. The creative units behind these KPO companies have been lauded for their consistent quality and output delivery speed, English proficiency and excellent ability to comprehend concepts and storylines. The Animation Council of the Philippines, Inc. (ACPI) fully supports the KPO companies who specialize in the creative arts and services sector

Medical KPO companies have also put up shop to accommodate medical transcription services, which has been estimated to be worth as much as US$10 billion to US$25 billion annually and growing by 15% each year. Another type of medical KPO collaborative healthcare services through medical call centers, a growing industry in the Philippines that employs registered nurses, a human resource highly abundant in the country. In 2009, Fly For Free Health founder Dr. Wei Siang Yu announced that the organization will be investing $2 to $4 million for two KPO centers in the Philippines. Fly Free for Health is an organization that provides collaborative healthcare services through medical call centers managed by healthcare professionals specifically trained in information technology, research and case management to serve a wider array of clients across the globe. It is not a surprise that KPO companies are coming to the Philippines for medical services, as the Filipinos are already globally known to be dedicated, diligent healthcare professionals, among other fields.

With the proliferation of KPO companies in the Philippines, the country is optimistic about getting a fair share of the global KPO market. The Philippine outsourcing and offshoring industry sees KPO as a great opportunity to showcase our workforce’s highly specialized skills in various fields. This 2010, we can expect the KPO industry to further mature and attract more clients both locally and globally.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

Typical services offered by KPO companies include business and financial consulting, legal processes and transcription, health information management, medical and pharmaceutical expertise, Intellectual Property Research, contact centers, creative services, animation and engineering design, among other things.

The country’s KPO companies are showing strong growth. Back office or non-voice contributed $1.1 billion to the country’s total outsourcing revenue in 2009. KPO companies specializing in computer game development posted a 50 percent rise in revenues in the same year.

“The back-office and KPO sector has been growing at a faster rate than the voice-based sector and we believe this trend will continue,” according to Joyce Virata, executive director for information and research of the Business Processing Association of the Philippines (BPAP). “In the next four or five years, we may see the voice and non-voice sectors at about the same size in the Philippines.”

In fact, some industry analysts even say the Philippines is becoming an increasingly attractive alternative to India as a global KPO hub. It is moving toward higher-value services and Philippines is now in a position to take on higher-value jobs, after proving its worth as a premier destination for call center services, Richard Mills, director of the Canadian Chamber of Commerce of the Philippines, said.

The country’s affinity for Western culture and the English language continues to be make the country highly suitable to absorb KPO functions from North American companies, experts says. In this regard, Philippines KPO companies are a viable destination.

Inexpensive but high quality work force, which is the backbone of the BPO industry, is also the main selling point of Philippine KPO companies. The country has over 120,000 midwives, 100,000 Certified Public Accountants, 95,000 licensed physicians, 40,000 medical technologists, 40,000 dentists, 26,000 electrical engineers, 22,000 electrical and communications engineers, 22,000 chemical engineers, 16,000 architects, according to a 2006 data from the Professional Regulation Commission. All in all Philippine KPO companies have access to over two million licensed professionals in various fields.

Additionally, the Philippine government is doing its share to support the emerging KPO sector.  KPO companies enjoy a number of exemptions, including duties and taxes, export taxes, fees, dues and licenses, if they set up operations in one of the country’s Philippine Economic Zones, particularly in the so-called Cyber Corridor.

The Cyber Corridor are key cities across the archipelago that were identified by the private sector, the academe and government as the strongest potential locations for BPO and KPO companies that provide back office, software development, medical transcription, engineering design, animation, game development and voice services.  The government identified the construction of physical infrastructures that enable BPO and KPO companies to thrive as one of its top priorities

“We worked to speed up the telecommunications network infrastructure by bringing down the cost of connectivity. We supported wider public access to communications and information services through the provision… encouraging the provision of broadband services in cities and identified growth areas, and a redundancy of telecommunications gateways,” Philippine President Gloria Macapagal Arroyo said at the 9th e-Services Global Sourcing and Exhibition in Manila last year. These infrastructure improvements have been among the most important reasons why BPO and KPO companies have been flocking to the Philippines, she added.

A recent research study comparing the Philippines with other major outsourcing countries also revealed another reason why KPO companies in the country are getting receiving global attention.  Outsourcing to the Philippines KPO companies are safer than outsourcing to India, according to the study. The report quotes a survey where over half of the respondents (52%) viewed KPO companies in the Philippines present lower risks than those in India while only 31% believed the risks were equal. Despite the limitations such as an inadequate supply of trained labor, the survey showed 81% of the respondents said KPO in the Philippines is a high growth prospect.

While the Philippines will continue to service non-core processes from other countries, it is simultaneously advancing its capability to handle processes of increasingly greater complexity. That many multinational companies are talking about Philippine KPO companies in the same light as Indian KPO companies is an indication of the gains the fledgling KPO industry has achieved, the report said.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

Currently, most knowledge process outsourcing firms in the country offer a wide range of services such as medical transcription, legal research and processing, publishing, transaction processing, and content production and editorial. Several KPO firms from countries with emerging KPO industries also offer these services, so the Philippines’ knowledge process outsourcing industry knows that it needs to step up in terms of both the quality of its services and the array of services it can provide. Local and foreign companies looking for cost-efficient solutions look to offshore outsourcing firms to provide them with high quality services for lower the cost. During the global financial crisis in 2009, many multinational firms moved several departments to outsourcing countries such as the Philippines. These businesses saw the fiscal advantages of outsourcing offshore, and now some of them have also started considering transferring core services to offshore locations.

The knowledge process outsourcing sector of the country realized this opportunity and rapidly expanded its portfolio to include specialized services in the field of procurement and supply management, game development and animation. The Philippines’ knowledge process outsourcing sector believes that it will be able to fulfill demands from foreign and local clients because the county has a large, highly skilled talent pool.

Knowledge process outsourcing companies that offer procurement and supply management services realize that the scope and relevance of this field have grown over the past years and now transcend traditional concepts of purchasing. Procurement outsourcing involves outsourcing all or parts of a company’s procurement functions to a neutral and external knowledge process outsourcing provider. It becomes the KPO firm’s responsibility to ensure the delivery of greater economies of scale, turn fixed assets to variable costs and reduce costs. The KPO company has to provide strategic and accelerated processes to help its client company attain a competitive advantage. Currently, knowledge process outsourcing companies in the Philippines that provide procurement outsourcing services cater to organizations involved in consumer packaged goods, oil and gas, manufacturing, high technology, services, public sector, construction and property development, non-profit, transportation, utilities and telecommunications.

Despite the bias against outsourcing, knowledge process outsourcing industry members are urging potential clients to look at the advantages of outsourcing procurement services to KPO companies. Procurement and supply management are important for organizations to realize their objectives. Outsourcing these services will allow the companies to focus more on their core competencies. These organizations will also benefit from outsourcing these services because most KPO firms that provide procurement services have process and domain expertise on supply management and procurement.

The game development and animations sectors are considered as the next big players in the Philippine knowledge process outsourcing industry. Animation and computer game development are still fledgling sectors compared to other sectors in the industry, but they were able to contribute an estimated $4.5 million to the Philippine BPO industry’s total revenues that amounted to $7.3 billion. Filipino game developers and animators are known to be very skilled and capable of satisfying client requirements when it comes to programming and animation.

There is, however, one major difficulty that both sectors must address: talent pool. The knowledge process outsourcing sector does not have a big enough talent pool of trained game developers and animators. This might become a problem when foreign clients start flocking to the country’s game development and animation studios and they can’t respond to these demands. These particular sectors in the knowledge process outsourcing industry need a bigger talent pool with more trained artists and developers to cater to foreign animation studios and game studios that come to the country to outsource.

The knowledge process outsourcing industry is expected to address this shortage in digital illustration and game development professionals. Currently, one university in the country has a game design and development program which produces graduates annually. The local animation sector, on the other hand, has old alliances with large animation studios such as Disney which employed Filipino artists even before the dawn of digital arts. Professionals with background in information technology and programming can be trained in game development if they have the desire to pursue another career and earn big money.

These emerging sectors that offer very specialized services can become key players in the KPO industry of the Philippines. The government, industry experts and business groups all believe that the BPO, KPO and ICT industries will grow in the following years, with industry growth translating into double-digit revenues.


PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

KPO was started by McKinsey in India when it opened up a knowledge center back in 1987 which was then closely followed by the opening of research centers of companies like GE, Gartner and Office Tiger. However, it was not until 2006 to 2007 that KPO took off. KPO is considered as the third generation of the outsourcing revolution. IT Outsourcing is known as the first generation while Business Process Outsourcing or BPO represents the second wave which came in 2002 to 2003. During these years, outsourcing firms started to offer more than just telemarketing and sales; they offered more complex transactions such as decision-making and problem solving tasks. Four years later, firms began offering knowledge-intensive BPO services currently regarded as KPO services. The workforce also changed when KPO firms started to provide KPO services to different foreign and local businesses. The KPO workforce profile became more diverse as people with MBAs and those with medical, engineering, design, medical and specialist business skills were being hired by KPO companies.

KPO’s central theme is to create solutions for clients by providing business expertise as opposed to BPO’s aim to provide process expertise to clients. BPOs work with standardized processes, but with the shift to KPO, providers also shifted to offering processes that involve technical skills, analytical thinking and decisive judgment based on experience. India is undoubtedly still the biggest player in the IT, BPO and KPO fields, having had the advantage of being the first country to benefit from the IT outsourcing boom early on. India is also reported to have the biggest talent pool with an advantage of 15 years’ experience over other countries’ talent pool. India’s workforce increases in number as young students graduate annually from some 400-degree granting institutions in the country. However, many countries such as the Philippines and China have appeared on the KPO map to provide KPO services to different foreign and local businesses. The lower cost of labor in India, the size of the talent pool, and the number of knowledge professionals are not the only bases of companies for choosing KPO firms that can provide them with the services they need. Businesses are looking at the scale and quality of the workforce, infrastructure, financial and risk environment, as well as the KPO firms’ inclination toward identifying skill sets and workforce-related metrics.

The KPO industry’s worldwide revenue in 2003 was reported to have reached around $1.2 billion according to US research firm Evaluserve. For the period of 2006 to 2007, the research firm reported that the KPO industry’s revenue amounted to $4.4 billion. According to the same Evaluserve report, the Indian KPO industry’s revenue in 2003 amounted to $1 billion and in 2006 to 2007 was reported at $3 billion. India’s KPO industry is aiming to claim 71% of the global KPO business. However, India is not the only big player in the global KPO sector as countries such as the Philippines, China, Israel and those in Latin America are starting to compete against India and are providing their own brand of KPO services.

Despite some negative feedback about offshore outsourcing, KPO firms are here to stay. The KPO industry in general has a bright future ahead and is expected to grow in the coming years. The KPO sector is expected to rack up around $16.7 billion in 2010 to 2011 as more and more businesses look for outsourced solutions and more KPO companies employ professionals with specific knowledge and skill sets. The US and UK’s aging workforce, the shortage of knowledge professionals in these countries, along with the fact that outsourced services provide cost-efficient solutions to companies constitute the primary growth drivers of the global KPO sector.