A special report of the Ministry stated that the BPO sector had been dominating for the past few years but Knowledge Process Outsourcing (KPO), which may be called the highest level of the BPO, was still at a nascent stage of development in India.
With a large pool of skilled manpower like chartered accountants, doctors, MBAs, lawyers and research analysis, India would be able to add value to the global KPO businesses and its high-end processes like valuation and investment research, patent filling, legal and insurance claims processing online teaching and media content.
The evolution KPO market would ensure very high-value services in off-shoring, which would help the Indian market climb the global value and knowledge chain with marginal revenue as compared to BPO units.
However, the report added, countries like Ukraine, Hungary, Belgium, the Czech Republic and the Philippines offered BPO services at lower rates and therefore India might lose its cost advantage.
According to the IT department, the transition from the BPO to the KPO could be relatively smooth since the IT-ITES companies were already very well established and also because of India's attractiveness as an investment destination.
Another key impact of the global sourcing model had been the reversal of the brain drain, as people of Indian origin now felt motivated to work in their own country.
Over the past six years, the IT-ITES sector's contribution to the national economy increased from 4.8 per cent in 2005-06 to 5.4 per cent in 2006-07.
The sector had grown to become the biggest employment generator with about 1.287 million professionals by 2005-06 and reacheed 1.63 million mark by March 2007.
Besides the direct positive impact on national income and employment generation, the sector had spawned the mushrooming of several ancillary industries, triggered a rise in direct-tax collections and propelled an increase in consumer spending.