The World Bank Institute offers a formal definition of a knowledge economy as one that creates, disseminates, and uses knowledge to enhance its growth and development.

A knowledge economy uses data as it raw material and transforms it using technology, analysis tools, and human intelligence into knowledge and expertise. Fig. 1 illustrates the main phases of this transformation process.

Fig.1 Steps in the Knowledge Creation Process

My vision is that India will become a leader in the global knowledge economy by 2010. This will be the result of a highly focussed effort to achieve global thought leadership in a few select fields that offer the highest potential for Knowledge Process Outsourcing (KPO). Here are three reasons for my optimism:

• India enjoys unique advantages in having a large pool of English-speaking professionals with degrees in engineering, science or mathematics, who are capable and flexible to learn new skills fast given the right opportunity and reward structure.
• The Indian Diaspora in the United States and the United Kingdom have several among them who have achieved thought leadership in knowledge intensive fields. They are a rich source of domain expertise and can be motivated to help transfer knowledge and expertise to India and nurture a new generation of India-based thought leaders.
• The entrepreneurial and energetic business community in India has the capacity to step up to this challenge and is capable of working closely with a supportive government to remove barriers that stand in the way of achieving of this vision.

Let's examine in some detail each of the three critical success factors that will help India achieve global leadership in the knowledge economy.

Unique advantages of Indians

The President of India, Dr. A P J Abdul Kalam, identifies India's human resource base as one of its greatest core competencies in a book titled India 2020: A Vision for the New Millennium where he predicts that India will become a developed country by 2020.

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He advocates that Indians at all skill levels can excel in knowledge-based services if given the right training and are placed in intellectually challenging environments.

I believe that Indians are able and willing to learn the necessary analytic and interpersonal skills needed to achieve thought leadership in the knowledge economy. A small minority of the scientists and engineers, primarily those who graduate from the IITs, IIMs and other elite institutes in India, have figured out on their own how to become world-class knowledge workers and thought leaders.

The crux of the challenge is to find the way to train what Dr Abdul Kalam calls the "ordinary Indian engineers and scientists" to achieve a similar level of competence that would gain them the global recognition as being world class.

Leveraging the Indian Diaspora

First-generation People of Indian Origin (PIO) in North America and the UK includes scientists, doctors, technologists, engineers and managers who migrated to these countries from India starting in the 1960s. Many of the children of these high achievers have been educated at the best universities in the US, Canada and the UK and are now part of the workforce in these nations.

Between these two groups of PIOs there are several hundreds if not thousands who are recognised thought leaders within the global knowledge economy. They are perfect role modes for what India-based staff needs to be like by 2010.

Yevgeny Kuznetsov at the World Bank Institute has teamed up with Alok Aggarwal, an IIT Delhi alumnus and co-founder of EvalueServe, and published a paper titled 'India's Transformation to Knowledge-based Economy: Evolving Role of the Indian Diaspora.' They concluded that the Indian Diaspora is increasingly expected to play the following crucial roles in the emergence of India's high-end knowledge services sector:

• �nFacilitating the gradual evolution of high value-add knowledge intensive outsourcing through mentoring and coaching the incumbent offshore vendors.
• Leveraging their reputation and credibility within the companies they work for to pitch for the Indian industry, thus increasing the equity of 'Brand India.'
• Developing a model for cooperation with India-based providers of KPO services in areas such as engineering design, enterprise decision management for financial services, innovation in biotechnology, et cetera.

There is early evidence that the change listed by Kuznetsov and Aggarwal are beginning to take place within captive units of large multinationals, such as GE Capital, HSBC, Amazon, Dell, et cetera.

The one shortcoming I see for now is that each company is trying to find its own way through this process. What would really accelerate this trend is the creation of a networked organisation where like-minded PIOs can learn as a group how best to overcome the internal and external hurdles they are bound to encounter along the way.

I see this is an opportunity for the Pan IIT alumni to lend a helping hand like they did when TiE (The Indus Entrepreneurs) was formed in 1992 and when the International School of Business was set up in Hyderabad around 2000.

Creating the climate for success in India

The responsibility of setting up successful KPOs in India ultimately belongs to the India-based business units that can effectively serve the global market. PricewaterhouseCoopers has identified four possible scenarios for the creation of KPO service providers:

• The well-established IT and BPO companies will move up the value chain and diversify into KPO;
• Companies currently serving specific vertical markets in India could choose to begin offering their services globally;
• Multinational companies may form captive units in India whose staff belong to global teams within various functional units; and
• New companies may be formed by Indians with very specialised skills and international work experience to provide services exclusively to the global market.

Irrespective of how they are formed, these business units should aspire to go all the way to create India-based expertise that produce tangible business benefits for the organisations they support within a short time frame.

They need to able to recruit, train and retain highly talented team members and be effective in moving them up the value chain.

Some of the real and perceived hurdles they could face include:

• Transfer of company culture and business context to Indian team members;
• Attracting Non-Resident Indians with domain expertise and leadership skills to move to India help jump start the India-based organisations;
• Ensuring frequent and effective communication between team members in India and their counterparts in the US and the UK;
• Training the India-based staff to influence decisions without usurping the decision-making authority away from the US- and the UK-based managers; and
• Eliminating the fear of the loss of IP and leakage of critical confidential information that could be potentially damaging to the client company.

Some closing thoughts

EvalueServe estimates that the global market for KPO is growing at 46% per year and will be worth $17 billion in 2010 and India should aim for at least a 50% share of this business. The biggest challenge India-based KPO businesses will face is to find world-class employees to meet the expected demand.

In the next article, I will examine the strategies that Indian BPO businesses can deploy to increase their pipeline of candidates significantly by tapping into the Indian Diaspora and graduates from non-elite Indian universities.

Part II: How India can be a global KPO king

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Dr Kandathil K Jacob works with Nomis Solutions, a San Francisco-based company. A mechanical engineering graduate from IIT Bombay, he has an MBA in Marketing and a Doctor of Engineering in Industrial Engineering from UC Berkeley. He lives in San Diego.