Need of Professionals: 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.

Consolidation and fragmentation: 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, 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.

Small Towns: 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: 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.

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.