Knowledge Process Outsourcing (KPO) Future Trends

 The KPO is growing day by day and the demand from western world for processing of knowledge is being forwarded to small countries of Asia :The Five most likely to occur Outsourcing Trends

With the opening of the world economy, many surprises have taken place in the business scenario. This is true for countries across the globe both from outside and within the countries. The western world have started realizing the potential and the importance of smaller countries of Asia in providing quality services at much lesser rates and are treating this fact as a revolution. 

Few of the emerging trends of the future are listed below which are likely to shape the future of the outsourcing industry.

Boom in the knowledge process outsourcing industry is an established fact now and as per estimates of various studies the industry shall range from anywhere between $12 billion and $15.5 billion for 2010. This envisages a growth rate of 40 to 50 percent for the industry for the next five years.

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 Consolidation and fragmentation of outsourcing fields in KPO

The emergence of “KPO” will see a proliferation and entry of new service providers in the arena of the industry. “The emerging opportunities in knowledge services are attracting a new breed of entrepreneurs, absolutely professionals like lawyers, chartered accountants, doctors, engineers, scientists, etc. into the outsourcing business..

Minimal entry requirements, low infrastructure and set-up costs will encourage the smaller technically strong companies to establish a KPO set-ups.

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 Small Towns –New areas joining the outsourcing buzz

India’s status as the No. 1 destination in the offshore business is not in doubt. However, lf the growth has been concentrated in a few cities, like NCR Delhi, Mumbai, Hyderabad, Bangalore, Pune and Chennai. But rising wage costs and rising attrition in the larger cities coupled with attractive benefits being offered by many state governments are driving the BPO move to the hinterland.

 Expansion of offshore centres in India

As benefits of offshoring business are becoming evident, large multinational corporations, are expediting the process of spreading the offshore presence.
The bulk of this is towards fully owned captives, driven by two factors. i.e. firstly, the increasing sensitivity towards data security , IPR, and confidentiality; all of which make captives center to be the most preferred choice.

 Acquisitions and mergers to increase

Acquisition and merger activity has reached new heights and is expected to be much higher in the coming years as a mode of expansion. However, along side mega deals, large number of small deals shall also become fruitful. This will be driven by acquisitions in the knowledge services domain, where acquirers will find it worthwhile to enter into small deals to acquire domain knowledge, new clients and position themselves in this small, but fast growing segment.

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In the coming years, we expect KPO to become a major target area for acquisitions. KPO acquisitions and mergers will form the growth strategy of two types of companies:

1. Already existing KPO companies which want to get benefited specific domain expertise, or clients in a particular area or geographic region.

2. Multi-service and multi directional BPO companies wishing to climb the value chain by adding high-end capabilities to their portfolios.

Deal sizes will be smaller mainly because KPO outfits are normally smaller than CRM or back-end processing service providers, since their business is dependent more upon domain knowledge than on scale.

So , wait and watch for some more trends which are in pipeline process...............