KNOWLEDGE PROCESS OUTSOURCING MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Size and Trends

The Global Knowledge Process Outsourcing Market is estimated to be valued at US$ 31.14 Bn in 2024 and is expected to reach US$ 88.12 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 16% from 2024 to 2031.

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Rising need to improve operational efficiency and reduce costs is propelling the growth of the knowledge process outsourcing market. Focus towards enhancing customer experience and streamlining business processes are also fueling the market growth. Furthermore, advancement in technologies such as artificial intelligence and machine learning are enabling outsourcing companies to offer enhanced analytical solutions. Adoption of these new technologies allow for improved data-driven decision making. However, data security and privacy concern may hinder the market growth to some extent going forward.

Rise of digitalization and advanced analytics

With digital disruption transforming businesses across all industries, companies are increasingly leveraging digital technologies and advanced analytics to drive innovation, gain competitive advantage and optimize business processes. Knowledge process outsourcing helps businesses stay ahead of the curve by providing access to skilled talent and capabilities in areas such as data analytics, artificial intelligence, machine learning, cloud computing, Internet of Things and more. KPO vendors assist clients in gaining insights from vast amounts of data through techniques such as predictive modelling, cluster analysis and big data analytics. They also help design and develop digital strategies, platforms and solutions that enhance customer experience and make business processes more efficient. Outsourcing knowledge functions allows companies to focus on their core businesses while leveraging the specialized digital expertise and infrastructure available with KPO providers.

For instance, in May 2022, Informatica Inc., an American software development company and Wipro, an Indian multinational corporation that provides information technology, consulting, and business process services announced a strategic collaboration to jointly offer cloud-based data analytics solutions to the market. This partnership will leverage Wipro's renowned expertise in analytics, data, and artificial intelligence (AI), combined with Informatica's robust AI-powered data management solution, to deliver the Wipro Fullstride cloud data platform.

Market Concentration and Competitive Landscape

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Cost optimization and increased focus on core strategies

In the current dynamic business environment characterized by compressed margins, intense competition, and demand for speed to market, cost optimization has become a top priority for most organizations. While knowledge functions remain essential to business operations, managing them in-house requires substantial resources and capital expenditure. Engaging with KPO vendors provides an asset-light, pay-as-you-use model where companies can access a global talent pool and state-of-the-art facilities at a much lower cost compared to having these capabilities on their own payroll. This frees up funds to invest in strategic initiatives crucial for growth. It also allows internal teams to concentrate their efforts on high-value, core domains and new business opportunities instead of routine tasks. The outsourcing model drives efficiencies, accelerates ROI and boosts profitability - factors that are top of mind for management in today's stressed economic climate.

Key Takeaways from Analyst:

The global Knowledge Process Outsourcing market continues to grow steadily driven by the increasing demand for specialized domain expertise and analytical capabilities that can help companies make better business decisions. Cost savings remain a key driver as vendors in lower-cost countries offer highly skilled resources at a fraction of the cost in developed markets. However, ensuring data security and privacy will be a major challenge going forward in this work-from-home era.

North America currently dominates the KPO industry owing to advanced analytical needs of companies. However, Asia Pacific is expected to be the fastest growing region led by India and China. Both countries have built strong reputations for providing high-quality analytical services to global firms across industries. The Philippines is also emerging as a key player with English-speaking talents.

While cost arbitrage will continue pulling more work to low-cost locations, clients also demand proximity to their bases of operations. As such, nearshoring to Latin America and Eastern Europe is gaining traction. Mexico and Poland are actively promoting their analytical skills to companies in the U.S. and Western Europe.

Intellectual property protection and access to niche skills could hinder the KPO industry growth. However, vendors are addressing these challenges by making large investments in reskilling and developing Centers of Excellence around new technologies.

Market Challenges: Security risks related to data leakage

Security risks related to data leakage pose significant restraints on the growth of the global knowledge process outsourcing market. Knowledge process outsourcing deals involve handling large volumes of sensitive client data, whether it is personal information of customers, financial records, healthcare records, intellectual property or other confidential data. Any incident of data breach erodes client trust in the outsourcing vendor and discourages other prospective clients from engaging in such arrangements.

Data leakage can occur through various means such as unauthorized access of data by insiders within the outsourcing firm, hacking or cyberattacks targeting the vendor's IT infrastructure, loss or theft of hardware storing the data, or careless handling of data that results in it being publicly exposed. Even a single moderate incident can affect an outsourcing vendor's reputation for a long time. Clients fear legal liabilities and public backlash in case their users' data is compromised due to inadequate security at the outsourcing partner. They may face penalties and lawsuits under strict data privacy rules like GDPR in Europe.

Market Opportunities: Digitization and automation

Digitization and automation could provide significant opportunities for the global knowledge process outsourcing market going forward. As business processes continue to be digitized around the world, there will be increased scope for knowledge process services that leverage digital technologies. Processes such as research and analytics, content creation, legal services which have traditionally required human involvement can now be supported by automation.

Automation is also helping create customized digital solutions and self-service models for specific industry verticals or business functions. The growing adoption of cloud and AI technologies will make it possible to develop scalable digital platforms that can address unique process requirements of organizations.

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Insights By Product Type - Rise in Litigation & Regulatory Compliance Drives Legal Process Outsourcing

In terms of Product Type, the Legal Process Outsourcing segment is estimated to hold 29.6% share in 2024 of the market owing to several factors. Legal process outsourcing allows law firms and corporations to stay compliant with an increasing number of regulations across various legal domains. It allows them to focus on their core operations while leveraging offshore expertise to handle documentation work, legal research, contract drafting and review, arbitration, and compliance-related activities more cost-effectively.

The growth in litigation activities both domestically as well as globally has been a major driver. With rising globalization, there is growing cross-border litigation which requires additional manhours. LPO firms help enhance the capability of law firms to handle larger workload without increasing overhead costs. They offer services spanning full case management to delicate tasks like e-discovery which need huge investments in technology and trained staff. This has boosted adoption of LPO significantly.

Insights By Application - Research & Documentation Boosts BFSI Sector Adoption

In terms of Application, the BFSI segment is estimated to hold 37.5% share in 2024 due to its heavy reliance on research and documentation activities. Knowledge process outsourcing allows financial institutions and banks to supplement internal research teams with scalable, trained workforce through the hybrid model of insourcing and outsourcing. LPO providers help sift through volumes of contracts and agreements, monitor regulatory changes, prepare reports on macroeconomic trends, and support various transactions with legal and research services.

BFSI players are also under constant pressure to launch new, tailored financial products and enhance customer experience through diligent market/industry research. Knowledge Process Outsourcing vendors help create customized research packs, leverage analytics tools to gain actionable insights into customer behavior and competitive landscape. They further assist in proposal drafting, loan documentations, and other back-office functions, freeing up critical workforce for core responsibilities. This has significantly boosted adoption of KPO models across financial domains including banking, insurance, and investment banking.

Regional Insights

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North America continues to dominate the global knowledge process outsourcing market and is estimated to account for 36.3% share in 2024 owing to the strong presence of established vendors. The region is home to large financial organizations, healthcare providers and technology firms that have been relying on knowledge process outsourcing to focus on core activities of their business. Countries like the U.S. and Canada have highly skilled workforce and strong legal infrastructure that attracts top vendors to set up their knowledge process outsourcing centers locally. This has allowed homegrown vendors to grow considerably and gain expertise over the years in managing complex processes for key industries.

Meanwhile, the Asia Pacific region has emerged as the fastest growing regional market. In particular, India and Philippines have established themselves as key sourcing hubs. A large English-speaking workforce with educational infrastructure focused on domains like accounting, healthcare and law have made India a natural choice for many Western companies. Vendors in India offer competitive pricing coupled with ability to manage processes in many global languages. The presence of global capability centers of top vendors within India has accelerated industry knowledge sharing and skill development. The country also simplifies business set up and foreign investment policies to encourage international work. In Philippines, growth has been backed by government investment to develop special economic zones with world-class infrastructure and facilities to attract shared services and outsourcing investments. This has created massive employment opportunities in knowledge services within the country.

Market Report Scope

Key Developments

• In May 2022, Wipro Limited and Informatica announced a strategic partnership to jointly offer cloud-based data analytics solutions to the market. This collaboration will leverage Wipro's renowned expertise in analytics, data, and artificial intelligence (AI), combined with Informatica's robust, AI-powered data management solution.
• In April 2022, HealthPartners, a leading healthcare organization in the United States, chose ExlService Holdings, Inc. to design an advanced care management platform on their behalf. This platform will enable HealthPartners to integrate population health analytics with their care management processes.
• In July 2021, Accenture announced the acquisition of HRC Retail Advisory. This strategic move is aimed at bolstering Accenture's retail strategy capabilities. According to Accenture's official statement, the acquisition was motivated by HRC Retail Advisory's extensive experience and proven track record of providing invaluable assistance to leading retailers across North America. By integrating HRC Retail Advisory's expertise, Accenture can further enhance its ability to deliver comprehensive retail strategy solutions to its clients.
• In October 2020, Contour, a global leader in decentralized platforms, announced a collaboration with Mphasis. The primary objective of this partnership is to accelerate the widespread adoption of the Contour network. Through this collaboration, Mphasis will leverage its expertise to implement Contour's decentralized platform across various industry verticals, including banks, corporations, and ecosystem partners. By integrating Contour's innovative technology with Mphasis' industry knowledge and implementation capabilities, the partnership aims to drive the adoption of decentralized solutions in the financial and corporate sectors.

*Definition: The Global Knowledge Process Outsourcing Market involves outsourcing knowledge-based processes and services that require skilled resources with expertise in research and analytics. This includes processes like legal research, equity research, data research and analysis, market research and competitive analysis. Knowledge process outsourcing helps companies leverage remote talent and expertise to gain analytical insights at lower costs. It allows businesses to focus more on their core operations while remote professionals and teams handle knowledge-intensive work requiring high-end research, critical thinking and data analysis skills

Market Segmentation

•  Product Type Insights (Revenue, US$ Bn, 2019 - 2031)
  • Analytics & Market Research
    • Customer & Marketing Analytics
    • Operations & Supply Chain Analytics
    • Competitive Intelligence & Industry Analysis
  • Engineering & Design
  • Financial Process Outsourcing
  • Legal Process Outsourcing
  • Publishing Outsourcing
  • Research & Development Outsourcing
  • Others
•  Application Insights (Revenue, US$ Bn, 2019 - 2031)
  • BFSI
  • Healthcare
  • IT & Telecom
  • Manufacturing
  • Pharmaceutical
  • Retail
  • Others
• Regional Insights (Revenue, US$ Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • A3logics
  • Accenture PLC
  • Boston Consulting Group, Inc.
  • Capgemini SE
  • Cognizant Technology Solutions Corporation
  • Concentrix Corporation
  • Deloitte Touche Tohmatsu Limited
  • ExlService Holdings, Inc.
  • Firstsource Solutions Limited
  • Genpact Limited
  • HCL Technologies Ltd
  • Hewlett Packard Enterprise Company
  • Infosys Limited
  • KPMG International Limited
  • Tata Consultancy Services Limited