Outsourcing of business operations is quite common in today’s world. There are very few (if any) large organizations (MNCs- Multi National Corporations) in the world that don’t outsource at least a handful of its operations. Here, we’re going to explore the differences between BPO and KPO.
Business Process Outsourcing (BPO) is the term used for the outsourcing of any process or function of a business to another business. The factors behind outsourcing these processes are to maximize productivity while also reducing costs. Processes that are outsourced are predetermined so companies seek providers who are good at following directions consistently. Some BPO examples include:
• Customer Support
• Human Resources (recruitment, payroll, etc.)
• Tech Support
• Website Services
• Transcription of Documents
Knowledge Process Outsourcing (KPO) refers to the transfer of knowledge from one organization to another. The company could be a different entity of the main business or a subsidiary. The differences between BPO and KPO start with the fact that KPO services are generally performed by candidates that have in-depth knowledge of a niche, domain expertise, and are able to apply that knowledge in a way that allows them to make confident decisions. Common KPO includes:
• Investment research services
• Market research services
• Data analysis firms
• Business research services
• Legal Services
• Media processing services
The Key Differences between BPO and KPO
BPO is a form of outsourcing that focuses on increasing the efficiency of internal processes within an organization. The tasks associated with BPO tend to focus on performing tasks that have a very specific process. On the other hand, KPO focuses on the gathering of knowledge and decision-related information that is outsourced to a third-party company.
BPO tends to follow strict rules that are part of a company’s standard operating process. That fact keeps things simple for the provider. KPO is a judgment-based service so it’s much more complicated. Providers must specialize in the service they are providing. In a nutshell, BPO requires expertise in a process whereas KPO requires expertise in knowledge.
Another of the key differences between BPO and KPO is that Business Process Outsourcing is volume driven while Knowledge Process Outsourcing is driven solely on insights.
Most companies are going to outsource certain activities that are not considered part of their core structure so that they can focus on the heart of their business. Both types of outsourcing are essential to the success of new businesses. In fact, outsourcing tends to be one of the first obstacles that businesses face in the initial stages. Those that don’t learn proper outsourcing tend to hit a glass ceiling and those that do often find huge success. So it’s important to understand the differences between BPO and KPO.
Here’s one final thought that I want you to keep in mind. KPO is just an extended version of BPO. As KPO continues to expand, BPO is losing its existence. Knowledge is powerful in today’s market so it’s no surprise that KPO is winning out. That’s why we see so many organizations starting to provide both types of services.
Choosing the correct outsourcing company is an important decision that will have a direct impact on the success of your business.
Author, Catherine is content developer who works in BackOfficePro. A talented writer by day and a good reader by night. She expresses her feeling and thoughts with the writing. She is loathe discussing herself in the third person, but can be persuaded to do so from time to time. [sic]
Disclaimer:”The information in this post is for research, instructional or informational purposes. Authentic Journeys does not promote or advertise BackOfficePro, nor have the two companies done business together.”