In this paper, the authors analyze how and why outsourcing has started moving up the value chain. An explicit distinction has been made between Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO). The findings indicate that, after its success in information technology, outsourcing started moving up the knowledge continuum to tasks that involve expertise and judgment, as opposed to the routine tasks. The KPO industry is expected to grow upto 45 percent in size by 2010. The global KPO pie in 2010 will be around US$17 bn, of which, US$12 bn (70 percent) will be outsourced to India. Therefore, the BPO industry in India will soon be overtaken by the emerging KPO sector, which will prove to be the biggest revenue grosser in future. India is well endowed with intellectual resources to take advantage of this opportunity. However, replicating the success of BPO in KPO would be a challenging task since the processes involved in each of them are different. It requires domain expertise; and therefore, it is important for KPOs to develop this expertise in a few areas and excel in the same, so as to meet varied customer requirements. The challenges are manifold, but India can still emerge as a major KPO player in the global arena by leveraging the intellectual capital and power of the Internet to offer quality research at value prices. Although costeffectiveness is a key, the reason for outsourcing is dictated by the best value principles. Outsourcing solutions for highend processes are usually customized and valuebased. It will be this customization, that will enhance the value proposition of KPO. This study also examines the present state of KPO in India and its desired role in the new economic scenario. In light of these findings, the study suggests some imperative factors for the success of KPO.

The evolution and maturity of the Indian Business Process Outsourcing (BPO) sector has given birth to yet another wave in the global outsourcing, i.e., Knowledge Process Outsourcing (KPO). The success in outsourcing business processes to India has encouraged many firms to start outsourcing their highend knowledge work as well. Cost savings, operational efficiencies, access to a highly talented workforce and improved quality are all underlying expectations in offshoring highend processes to India.

KPO refers to the outsourcing of highend complex tasks and processes to specialized service providers. As compared to traditional BPO, KPO delivers higher `business' value to an organization and also enhances BPO's traditional costquality paradigm. The central theme of KPO is to create value for the client by providing content expertise rather than process expertise. Hence, KPO requires moving from simply executing `standardized processes' to carrying out processes that demand advanced analytical and/or technical skills and some decisionmaking or decision supporting processes.

Management Research Journal, Business Process Outsourcing, BPO, Knowledge Process Outsourcing, KPO, Compounded Annual Growth Rate, CAGR, Global KPO Sector, Global KPO Markets, Intellectual Property, Confederation of Indian Industry, CII, BPO Services, Indian Institute of Management, IIMs, National Association of Software Services Companies, NASSCOM.