Bruce MacEwen at his Adam Smith, Esq blog talks about What KM and Legal Outsourcing Have in Common. The setup is a discussion of a poorly-researched article on outsourcing legal services, but the quote I grabbed is the second-to-last paragraph:
The larger point is that "India" represents, at a conceptual level, the equivalent of a basic knowledge management system. What is KM, after all, but an attempt to make basic document generation more productive and efficient? Nothing is wrong with that, and by extension nothing is wrong with taking advantage of what India can provide for the basic garden-variety items (which are intellectually uninteresting anyway, by definition). This reminds me of politicians grandstanding about the loss of garment factories to Mexico or China: Is your dream for your kids that they can grow up and go to work in a textile mill?
I'd argue the slapdash definition of knowledge management , but it fits in this discussion. For me, the goal of KM is to make working with "knowledge stuff" more effective and efficient. This can certainly apply to documentation (codifying), but it also applies to innovation, socialization of knowledge, knowledge exchange -- any of the processes that deal with the lifecycle of knowledge. Which ones you worry about depend on what your business does.
Back to Bruce's point. Outsourcing, KM, and even Word are all just tools or capabilities. Does the tool fit your strategy? If so, have at it. If not, don't worry that someone else is doing it.