Knowledge Process Outsourcing (KPO) enables companies to expand their growth by outsourcing their core business processes to providers who have highly skilled and specialized professionals and at a competitive cost. 

This is the main difference between KPO and its predecessor, Business Process Outsourcing (BPO), which focuses on standardized and routine processes for purposes of reducing fixed costs. In other words, KPO delivers services more at a strategic than at an operational level. It offers experience in the business more than in processes.

According to KPMG, KPO is about "intellectual arbitrage". This differentiates KPO from other outsourcing methods, which focus on cost arbitrage. KPO is characterized by niche offerings, highly skilled staff and a relatively small scale.

Knowledge Process Outsourcing (KPO) has great potential since it is not restricted to Information Technology or Information Technology Enabled Services (ITES). For example, it includes strategic business areas that require highly skilled human capital: legal processes, engineering, intellectual property, web applications development, animation, CAD applications, business intelligence, clinical research, publications and market research, among others.

Competitive advantages 

KPMG affirms that many companies realize that outsourcing strategic and core functions can not only optimize business performance but can also expand their capabilities in these areas.  It also enables a greater focus and concentration on the organization’s most important strategic areas.

According to a publication by the Inter-American Development Bank (IADB), KPO processes are highly sensitive to geographical location. Therefore, Latin America and the Caribbean offer an excellent scenario for providing these services, since the main companies in need are in the United States and Europe. In addition to proximity, the region also offers greater cultural affinity and human capital trained in the language of these markets.

Other data submitted at the Peru Service Summit by the Consulting Firm AT Kearney, estimates that the KPO market will continue to grow at an accelerating pace, projected at 20% for 2013. This sector offers a great opportunity for the region, with an estimated value of 17 million dollars for the same period. This is because more companies are convinced of the benefits of outsourcing high quality services in areas such as finance research and analysis, law, engineering and health.