While organizations are still trying to master Information Technology Outsourcing (ITO), and grapple with Business Process Outsourcing (BPO), they are now faced with a new industry trend: KPO.
The market for KPO services in the financial services sector alone is expected to be worth US$ 5 billion by 2010, claims the report. KPO, seen as the third generation of the outsourcing process, may now be considered a bona fide, mainstream outsourcing option. However, KPO is different from the more traditional outsourcing offerings and approaches. It cuts into the traditional core competencies of many organizations focusing on high-end activities which were traditionally considered part of a company’s competitive advantage. This marks a major stepping stone for the outsourcing industry; moving from being at the periphery of the enterprise to the very heart of it. KPO also involves outsourcing more highly skilled processes than has previously been the case with other outsourcing methods, focusing on intellectual arbitrage rather than on cost reduction potential.
Both the ITO and BPO outsourcing waves radiated from India. At a first glance, the same seems to be happening with KPO. In the future, India, and English-speaking locations, are expected to remain a preferred location for KPO.