In today's competitive scenario, `Knowledge Process Outsourcing' (KPO) has emerged as the new buzzword. The birth of globalization has paved the way for increased competition among countries. The gap between the cost of capital and productivity has made companies realize the significance of managing costs for business efficiency. The emergence of Knowledge Process Outsourcing (KPO) has transformed this, since the companies want to have tailor-made solutions for specific issues like cycle time efficiency, market research and demand-based management. The present paper focuses on the role of KPO in generating business opportunities in India. In this regard this paper discusses upon the various advantages of outsourcing, challenges against KPO industries in India and suggests strategies to overcome these challenges.