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Six Crucial Differences Between KPO and BPO

October 27, 2016 Claire Ponsaran
Six Crucial Differences Between KPO and BPO

For some people, it’s not easy to delineate between business process outsourcing (BPO) and knowledge process outsourcing (KPO). Both industries provide outsourced services to their clients. They hire employees who are fluent in English and have computer skills. So, what’s the difference?

Technical Expertise of KPO Employees

The difference is in the technical expertise of employees that KPO companies hire. They’re more interested in hiring lawyers, doctors and HR professionals than people with basic communications and technical skills. Companies hire lawyers and legal assistants for legal process outsourcing work, such as writing and editing legal documents and analyzing their content. In the pharmaceutical industry, companies will want to hire doctors and medical researchers because of their training and experience.

In contrast, BPO companies don’t need much from job seekers. Candidates with a strong command of English and armed with a college diploma are already qualified for a job at a call center.

For KPO companies with a focus on IT-enabled services, however, those credentials are not enough. These services will need offshore tech support staff who can handle calls from the U.S. or any English-speaking country. They’re trained to help technologically challenged customers and make sure things ran smoothly at night and during weekends when the client’s onshore staff are not available.

KPO Market is More Segmented and Granular

With that said, the market for KPO services is more segmented and granular than for BPO. Companies who engage in knowledge process outsourcing need their staff to use custom software or applications, such as Quickbooks for accountants and bookkeepers or AutoCAD for architects and engineers. Some services, such as data mining and analysis, use predictive response modeling.

These companies want to leverage the experience and expertise of these professionals. And, they’re willing to let their service provider manage highly complex, non-transactional core processes. These processes include medical claims and database management, business intelligence research, and financial analysis. In some cases, outsourcing services are a mix of KPO and BPO. For example, a mobile application developer not only works out the kinks from his app, but he also takes on the job of answering queries from users who are having difficulty in making the app work for them.

KPO Employees are Self-Motivated

Employees in KPO companies have self-direction. They don’t need a script or a marketing spiel to do their job well. They are knowledge specialists. They make their own decisions and they organize their work according to the instructions of the client.

A good example of this kind of work is logo design. The client shares his ideas on what the logo would like, but the graphic artist ultimately decides what the conceptual design would be.

KPO Workers Directly Report to the Client

Employees in KPO companies report directly to the client. Unlike in BPO companies where top managers and team leaders are the only ones who communicate with their clients, employees in KPO companies have a voice. They send daily updates on their work and report any work-related issues as soon as they come up. Clients don’t have to wait by the end of the week or month to know what’s happening with their outsourced staff.

KPO Workers have Depth of Insight and Valuable Experience

Employees are evaluated by the depth of insight they provide in their work. In KPO jobs, quality wins over quantity all the time. The quality of information derived through analysis is more important than the volume of data produced. For example, market research revealed that a thousand people bought a particular product. Knowing that is good, but knowing which of these people will likely return and buy another product is even better.

Offshore Outsourcing is Cheaper

Offshore labor is cheaper, although KPO employees in the Philippines are not any less experienced, intelligent and expertly trained as their counterparts abroad.

Clients have the option to outsource some parts of their day-to-day operations to a different company in their country of origin. But that’s very expensive, to say the least. It’s also difficult to find IT professionals in their country who are willing to work as tech support at night or during weekends to answer phone calls and emails from either irate or panicked customers.

To iterate, knowledge process outsourcing to an offshore location offers the following:

  • KPO employees have greater technical expertise than BPO.
  • KPO has a more segmented and granular market than BPO.
  • KPO employees have self-direction unlike those in BPO companies.
  • KPO employees report to the client directly.
  • KPO employees are evaluated by the depth of insight they provide.
  • Offshore KPO companies have lower rates than onshore outsourcing firms.

If you want to know how outsourcing works, contact our Rethink Staffing representative now and ask for more information or schedule a meeting with an outsourcing consultant.

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1 Comment on “Six Crucial Differences Between KPO and BPO

  1. In simple terms, BPO is nothing but entrusting or assigning particular business activities or processes like customer service, finance, and accounting to third-party service providers. Though the delegated processes do not constitute the nub of the delegating business entity but are crucial for its functioning. When the concept of BPO gained currency, it was primarily restricted to the manufacturing industry. KPO is concerned with the delegation of information management related functions to qualified external agencies. Now, let’s have a quick look at some of the obvious dissimilarities between KPO and BPO.

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