India set to ride the KPO wave: Report

"Asian countries like India, Malaysia, Indonesia are natural destinations for these. They have the advantage of demographics on their side," Zarrella said.

Similarly, some countries in Eastern Europe and Latin America too could develop as important non-English speaking centers. And, countries offering attractive personal tax regimes, superior lifestyles and physical security are also well placed to attract professional and technical talent from less favorable locations.

However, "none of these countries are a threat to India because India has the numbers. If any company wants to scale up, they will have to do it from India," he added.

According to Zarrella, with 32 percent of India's population being below 15, it is only in this country that abundant manpower is available for this kind of an industry. None of the other places that are trying to build a KPO niche has such a huge young population, he said.

However, the top KPMG executive warned KPO is not a volume or cost arbitrage game but about knowledge and clients pay top dollar for quality. And, India, which already has a strong base in IT services and BPO sectors, should now build a knowledge base and move up the value chain.

"These are premium dollars. People will pay only if you have the knowledge and wisdom that they do not have in their companies. It is not a costs game, it is a knowledge game," he said.