India set to ride the KPO wave: Report

The study notes that the possibilities that KPO, which surprisingly focuses on the high-end activities that were traditionally considered part of a company’s competitive advantage or core activities, presents in India are endless.

However, there are major challenges to overcome too.

Firstly, India’s industry competitiveness is on the decline following the appreciation of the Indian rupee against the US dollar.

Secondly, there are apparent shortcomings in the KPO providers' legal and compliance departments that could place valuable intellectual property at risk.

Thirdly, KPMG foresees an escalating battle for talent in the KPO market due to the highly specialist skills which it offers. And, to overcome high attrition rates, KPO providers need to quickly adopt recruitment and retention strategies to attract and keep staff with the required qualification and skill sets.

"Without those talented people, KPO simply cannot exist. Such people - in appropriate locations - will become extremely sought after," Zarrella said, adding that KPO providers should look for alternative locations for additional delivery centers, both from a customer and service provider perspective.