In many ways, outsourcing is a microcosm of the larger business world. That's certainly true with regard to the value of certain skills. In outsourcing, as in the broader business universe, specialized skills are worth far more than general qualifications.
So it's no surprise, then, that Indian firms eager to compete head-to-head with companies like IBM and Accenture are trying to advance up the outsourcing food chain by offering knowledge process outsourcing. Unlike business process outsourcing, which focuses on mundane back-office functions like payroll, KPO demands more specialized knowledge in specific verticals like law and biotech.
One KPO vendor interviewed in a recent Reuters article thinks the market will quadruple in the next five years, reaching $10 billion to $12 billion by 2012. Outsourcing firms earn up to 50 percent more for KPO than for call center work, a market with such rapidly shrinking margins that some firms decline to provide it unless it is part of a broader and more profitable contract.
Legal outsourcing appears to be an especially fast-growing area of the KPO market, with companies like DuPont sending an increasing amount of legal work offshore. The attraction: experienced lawyers that can be employed at rates far lower than their American counterparts.