KPO involves outsourcing of core functions which may or may not give cost benefit to the parent company but surely helps in value addition. The processes which are outsourced to KPOs are usually more specialized and knowledge based. Services included in KPO are related to R&D, Capital and insurance market services, legal services, biotechnology, animation and design, etc. are the usual activities that are outsourced to KPOs. LPO or Legal Process Outsourcing is special type of KPO dealing with legal services. 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.
NetEdge Reviews also speaks on the transition from outsourcing numerous business functions to outsourcing domain based process and business expertise has risen in the past few years. The nascent growth from BPO to KPO is steadily gaining momentum as more and more companies are realizing the immediate cost savings (over 30 per cent) and tangible benefits that accompany this business service without compromising on quality service standards and delivery.
Why KPOs are emerging at a rapid pace now?
1) Lack of highly qualified professionals in developed countries.
2) BPOs are shifting further east to Philippines and Bangladesh, thus India is exploring KPOs as the next big thing for them.
3) As the US Government is taking steps to reduce outsourcing, BPO will get hit the most, unlike skill based KPOs.