The dividing line between KPO and BPO is still very faded; some experts say that KPO is not different from BPO. It is only a kind of BPO. Says Karnik, "Broadly, KPO is a subset of BPO. It just occupies the higher end of the BPO spectrum."

In fact, KPO owes its existence to BPO. It is its natural progression. After reaping the benefits of outsourcing low-end processes to India, foreign companies are now trying their hands at outsourcing high-end processes to the country.

KPO is the next step in the outsourcing pyramid. For instance, in a financial service BPO, data entry of invoices has been around for some time. But given the value-for-money Indian BPOs have shown, international companies are thinking, why not broaden the scope to include financial analysis?