Six Crucial Differences Between KPO and BPO
27 Oct

By Claire Ponsaran | Posted on October 27, 2016 at 8:10 PM 0 Comments

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 rather than people with basic communications and technical skills. Lawyers and legal assistants are pursued by companies for legal process outsourcing work, such as writing and editing legal documents and analyzing their content. In the pharmaceutical industry, doctors and medical researchers are valued for their knowledge and training in their respective fields.

In contrast, BPO companies don't require 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. Such services require offshore tech support staff who are experienced in handling calls from the U.S. or any English-speaking country. They're trained to assist 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 require 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, make use of predictive response modeling.

These companies want to leverage the experience and expertise of these professionals. And, they're willing to hand over the management of their 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 can be 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 Employess 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. Several versions of the logo are presented to the client as collaterals.

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 ones who submit progress reports to their clientèle, employees in KPO companies have a voice. They provide daily updates regarding their work and inform the client of 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 from 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, check out this visual timeline that Rethink Staffing prepared for new clients.


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Tags: BPO, business process outsourcing, difference between KPO and BPO, knowledge process outsourcing, KPO, Outsourcing

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