Knowledge Process Outsourcing, or KPO, is the latest wave to hit the outsourcing business in India. A booming sector with tremendous potential, the KPO sector in India employs around 25,000 people currently.

But experts say that KPO is set to be worth a $14 billion business employing 250,000 people in India by 2010.

Find out more about KPO, which is likely to surpass BPO (business process outsourcing) in India.

What is KPO?

KPO is Knowledge Process Outsourcing. It involves outsourcing for high-end knowledge work. This includes research and work on intellectual property, equity and finance, analytics, market research and data management, et cetera.

Why is India the preferred KPO destination?

India has a growing population of educated people capable of handling high-end knowledge-based work and research. With a huge talent pool, India could emerge as a global KPO hub as the sector requires specialised knowledge in respective verticals.

With the mushrooming of engineering and technical institutes in India, there will no shortage of skilled manpower in India. A Confederation of Indian Industry study states that India's transition from a BPO destination to a KPO destination is imminent.

Apart from India, countries such as Russia, China, the Czech Republic, Ireland and Israel are also expected to bag a lucrative pie of the KPO industry.

The cost advantage: More and more companies are turning to India for offshoring KPO work as quality work gets done at cheaper rates. India also offers significant cost advantages as much as 40 to 50 per cent in the areas of research and clinical trials.

For instance, drafting and filing of patent applications in the US is very expensive. A typical application costs about $10,000 to $15,000 to draft and file with the United States Patent and Trademark Office. Companies can save up to 50 per cent of the cost by offshoring the work to India.

KPO to surpass BPO

India's business process outsourcing industry will soon be edged out by the emerging KPO sector as the biggest revenue grosser, according to Kiran Karnik, President, National Association of Software and Services Companies. The global KPO industry is likely to become worth $17 billion by 2010, with the Indian industry capturing between $12-$14 billion of it.

KPO, a lucrative career option

KPO sector offers a good working atmosphere with global exposure and an opportunity to develop skill sets in a specialised field. The remuneration is high as a person with about two years experience can draw a pay packet of around Rs 6 lakh (Rs 600,000) to Rs 8 lakh (Rs 800,000) annually, while an experienced professional gets anywhere between Rs 15 lakh (Rs 1.5 million) and Rs 20 lakh (Rs 2 million).

What are KPO's focus areas?

Areas with significant potential for KPO include pharmaceuticals, biotechnology, data search, integration and management services, financial services, research and analytics, technology research, computer-aided simulation and engineering design and professional services, such as business research and legal services.

Offshoring research and development in pharmaceuticals and biotechnology also holds great potential for KPO.

More foreign firms head for India

Law firms such as Patent Metrix, Cantor-Colburn and Schwegman, Lundberg, and Woessner & Kluth have already set up offices in India. Offshoring R&D in pharmaceuticals and biotechnology also has enormous potential for KPO.

Pharma majors Astra Zeneca and GlaxoSmithKline [Get Quote] have set up drug discovery centres at low-cost destinations to boost their research and development activities. Even for R&D in software and chip design, major telecom and IT companies opt for India.

Motorola, Intel, IBM, Cisco, Texas Instruments, Nokia and Philips have set up offshore design centres in India.

Challenges that face KPO

Like the BPO sector, KPO also faces attrition, as it is difficult for companies to retain talented and trained people. With higher pay packages and perks, people change jobs very frequently. Many people are still reluctant to join as they feel it is an unstable career.

Many are unaware of the potential of this sector and the scope of future prospects. There is a lot of scope for teachers as this sector offers a good pay package. The sector also requires higher level of control, confidentiality and enhanced risk management.

Who can join KPO?

Unlike BPO where knowledge of English is essential, KPO focuses on educational qualifications.

Educational qualification is important as the work involves specialised knowledge. People from diverse backgrounds can join this field. Teachers, engineers, MBAs, professionals with financial background and even journalists are qualified to work in KPO. People with science background have a better chance as some tasks require data analysis and programming.

KPO tasks require domain expertise for projects involving moderate to high levels of analysis, especially those related to industrial sectors. The kind of work employees have to do includes abstraction of technical patents, extraction of legacy technical data, cataloguing and indexing, taxonomy building and database creation and updating.

All this requires a basic interest and knowledge in specific domains besides an aptitude for working with data and information.

What is the recruitment procedure like?

Companies have a cut-off for marks (grades), depending on the kind of domain knowledge required for the particular project. The works also requires people to have a right aptitude and attitude for doing research-oriented work.

After recruitment, the candidates are trained in various skills. Besides this, the candidate should possess good communication skills, should have an aptitude towards programming, should be able to work in a team, under pressure and of course different shift timings.