BPO vs KPODifferences You Need to Know Between the Two!

Denise Elizabeth P
Senior Financial Editor & Contributor
Last Updated: April 25, 2022
Date Published: April 25, 2022

One of the fastest-growing industries nowadays is outsourcing services. 

It is mainly categorized into two: Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO).

Technological innovation has been a big part of the success of this industry, mainly because these types of services make it possible for transactions to be done remotely.

The outsourcing of services is done for companies to save time, resources, and money.

In a snapshot, the difference between a BPO and KPO can be summarized as follows:

  • BPO is the outsourcing to third-parties non-primary activities such as customer support, recruitment, human resources, etc., to decrease a company’s expense and increase the productivity and efficiency of the firm. 
  • KPO is the outsourcing of highly skilled people as firms transfer key processes to another company such as the legal process, research & development (R&D), data analytics, etc.  

What is Business Process Outsourcing (BPO)?

BPO or business process outsourcing is how a company subcontracts to a third-party service provider to minimize its operating costs.

Instead of hiring a permanent employee, the company will enter into a contract with a third-party service provider and ask them to do certain job functions such as advertising, marketing, recruitment, technical support, human resource, etc.

Three primary types of  BPOs:

  • On-shore BPO – this is also called domestic sourcing. It is when a company and the BPO enter into a contract under the same regulating country. 
  • Nearshore BPO – is done by contracting a service from a nearby county.
  • Offshore BPO – is a manner of contracting to a third-party service provider that is located in another country.

Business Process Outsourcing

What is Knowledge Process Outsourcing (KPO)?

KPO or Knowledge Process Outsourcing requires a more complex list of skills and it requires specialization in different fields such as financial advisory services, data analytics, medical specialized areas, legal, technical analysis, and many other highly skilled and highly professions. 

BPO and KPO Key Differences

  • BPO means Business Process Outsourcing, while KPO means Knowledge Process Outsourcing.
  • BPO job functions mainly focus on front-office functions that are customer-related and administrative functions. Whereas KPOs are highly skilled, highly educated professionals who are experts in their fields 
  • The services that fall under a BPO are customer care representatives (call center agents), advertising or marketing personnel, technical support, human resource, and quality assurance. On the contrary, KPO domains are technical analysis, financial consultancy, research and development, medical and health, and legal.
  • BPO is standard-based, while KPO is conceptual framework-based.
  • BPO requires good customer service skills. While seasoned professionals are required in KPO. 
  • BPO job functions are less complicated while KPO requires specialized knowledge because of the complexity of the job functions.
  • BPO has already a set of guidelines that it follows. KPOs will base their output on professional judgment.

BPO vs KPO Head to Head Difference

BasisBPOKPO
NameBusiness Process OutsourcingKnowledge Process Outsourcing
DefinitionThe job specifications are for front office functions; customer-related and administrative-related

functions.

Professionals who are experts in their field
Based onStandardsConceptual Framework – Professional judgment
Degree of ComplexityLess complicatedComplex
SkillsRequiredInterpersonal / Customer Service SkillsSpecialization in certain field
Focus onTechnical support, customer care, advertising, marketingLegal, research and development, financial
ServicesHuman resource, recruitmentConsultancy, medical and health, research and development

Conclusion

Outsourcing can be considered a practice to minimize the costs of the company while increasing their productivity and efficiency.

Through outsourcing, a lot of time and effort will be saved and there will be no need of conducting training necessary for highly skilled professionals who will be handling the account of the business.

One example of an expense that will be eliminated is the training expense, which can cost a considerable amount of money. 

While KPOs may be considered as a subclass of BPOs, their job functions are very distinct from each other but are both important to the overall operations of the business.

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  1. MIT "Successful Business Process Outsourcing" Page 1 . April 25, 2022

  2. Bellevue University "Outsourcing in Project Management" Page 1 . April 25, 2022