Many have been beating the BPO drum recently. But business process outsourcing is really old hat now. The new buzzword is KPO (knowledge process outsourcing). “After demonstrating its success in information technology, outsourcing has begun moving up the knowledge continuum to tasks that involve expertise and judgement as opposed to a routine that can be run off a computerised menu,” says Ravi Aron, professor at the Wharton School, University of Pennsylvania.

“Most jobseekers who come to us believe that KPO is just a BPO job that pays more,” says Kiran Parker, a freelance headhunter for BPO firms.

There is actually a huge difference. And India may not be as well placed to reap the harvest. The reasons: low salaries and a knowledge of spoken English, factors that gave the country the edge in BPO, don’t matter so much.

Look at the optimists first. Nasscom president Kiran Karnik says that KPO will outgrow the BPO sector in the next few years. According to estimates by Scope e-Knowledge Centre, a Chennai-based leader in KPO, the total outsourcing market will be $70 billion by 2010. Of this, BPO will be $45 billion while KPO will be $25 billion. A report by GlobalSourcingNow puts the KPO figure at a more pessimistic $17 billion, of which $12 billion will be outsourced to India. The report also says the Indian KPO sector will employ more than 250,000 professionals by 2010, compared with the current roster of 25,000.

All that may sound wonderful. The bad news is that not every Sunder or Shanta, equipped with nothing more than English proficiency and a bit of general knowledge, can walk into a KPO firm and expect to be greeted with open arms. KPO requires a certain amount of domain knowledge.

Consider an example. US investment banks are even today outsourcing jobs to India. But they are currently doing simple accounting, basic data management and call centre work. The vital research and analysis, which requires intellectual inputs, is only 3 per cent. This will rise to 20 per cent by 2010. Another illustration of KPO is legal work such as writing and filing patent documents. Says headhunter Parker: “The average BPO employee will be totally at sea. You need special skills.”

Special skills translate to higher salaries. True, a University of California study says that legal assistants and paralegals working in India get about $8 per hour against $20-25 for their US-based competitors. But that’s way above the salary figures currently touted in the BPO industry.

The problem for India is that such domain skills can just as easily be acquired by employees in other countries. Yes, Indians are known to be analytic, so they may still have the edge in areas such as equity research. But in domains such as editing, and putting together a magazine, countries such as Poland are stealing the show. According to one analyst, when it comes to written English, Indians don’t enjoy any particular edge. Countries that will prove challengers in the KPO arena include Russia, China, the Czech Republic, Ireland and Israel.

This battle will prove a little more difficult to win.