BPO vs. KPO: What’s the Difference?

We’re sure you’ve seen more than a few articles on sites much like our own preach the good word of outsourcing over, and over, and over again. While it can’t be denied that there’s much to be gained from the outsourcing industry, it’s high time we started delving a little deeper. We’ve all heard of BPOs before, and maybe even its lesser-known cousin, the KPO. Question is — what’s the difference?

To put it simply — one’s less complicated than the other.

First off, though, let’s break them both down. What exactly do these terms mean?

Definitions: Business vs. Knowledge

Business Process Outsourcing falls under the definition of outsourcing you’re probably most aware of: contracting business-related operations to third-party vendors to cut down on costs or fill gaps in the workforce. This is usually done for non-primary operations, both on the front and back-offices of your business.

BPO is most often employed in low-risk tasks involving Human Resources, Customer Care, Technical Support/Solutions, Finance, Accounting, and Website Services. 

As we highlighted above: BPO typically focuses on non-primary, less-specialized business processes. KPO on the other hand involves more specialized knowledge-based work — focusing instead on more complex, high-level business processes. 

Some of the services usually outsourced this way are Research and Development, Management Consulting, Data Analytics and Interpretation, Legal Services, and Investment Research. Outsourcing these core processes can, however, present significant security risks, so it’s important to have measures in place to protect your data.

Key Point

BPO is an umbrella term for outsourcing related to business processes, and it’s more often used to refer to low-level, less complex operations that only need basic qualifications. While still a subset of BPO, KPO often requires more technical and professional qualifications, referring to the outsourcing of more technically challenging and complex business processes to a third-party vendor.

The biggest difference lies in the specialized nature of KPO, bringing highly skilled and qualified personnel alongside their knowledge, insights, and process expertise to the client company. 

Again — one’s less complicated than the other.

Conclusions

On top of cost reduction and giving you more flexibility in your workforce, outsourcing allows you to focus on your organization’s core processes and improve on the areas you outsource, owing to the vendor’s specialization in said non-core areas. However, it should be noted that these benefits also exist for Knowledge Process Outsourcing and its focus on core processes, so there’s no definite “superior” option. Whether or not either one best suits a company is entirely dependent on said company’s needs and situation.

Before you go making deals with these third-party vendors and outsourcing firms, it’s important to consider what exactly your company needs and which agreement you stand to benefit the most from. Do your due diligence, read some more, ask questions, and make sure you strike the best deal you possibly can.

One’s more complicated than the other, but that doesn’t necessarily mean it’s better for you and your company’s needs.