KPO is essentially an offshoot of Business Process Outsourcing (BPO). KPO provides value added benefits to the organizations by concentrating on domain based processes and business expertise rather than just process expertise. Growth of KPO industry in India is expected to be tremendous in the next few years. Precisely it is predicted that in the future the low-end activities of BPOs’ would shift to destinations such as Bangladesh and Philippines, while high end activities would be concentrated by Indian KPOs. It is in this environment of bioinformatics, the objectives of this paper is to study the importance of KPO with respect to the Indian scenario, analyze how certain KPOs function across various functional streams and the challenges and threats faced by Indian KPO companies. For the analysis of certain KPOs, primary data was collected from three companies namely WNS Solutions, Integreon Management Solutions, Andheri and Tata Consultancy Services, Bangalore. The data was collected through personal interviews and email conversations, and the secondary data was shared by the companies. The paper explains briefly how these companies pursue KPO activities followed by the threats and challenges faced by the KPOs both in the present and future.