Difference Between BPO and KPO (With Table)

BPO vs KPO

The key difference between BPO and KPO lies in the fact that BPO stands for Business Process Outsourcing and KPO stands for Knowledge Process Outsourcing. BPO provides non-primary activities of their organization to other organizations for decreasing cost and increasing capability while KPO provides information and knowledge to service providers.

BPO requires good communication skills in employees whereas KPO requires professionally qualified employees.

Outsourcing is known as a business practice. To be precise, one company hires an individual or a company to perform their tasks, operations or projects.

The company that takes their tasks is called outside company or third-party provider. They are giving these tasks to their staff members to perform them.

These actions can be done either on the site at the hiring company’s facilities or external location.

 

Why companies are using outsourcing?

The companies who had experienced growth, are always looking for professionals. So, to keep up the pace, they are hiring an outside company to do their tasks. This way, the business can reduce their costs and keep the flow.

There are two types of outsourcing: Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO).

BPO is defined as outsourcing for non-primary activities. They are giving their tasks to a third-party provider to decrease their costs and to raise the productivity of the company.

KPO refers to outsourcing, which relies on its highly skilled staff, transferring their knowledge and process with other companies.


 

Comparison Table Between BPO and KPO (in Tabular Form)

Parameter of ComparisonBPOKPO
DefinitionBPO is defined as outsourcing for non-primary activities. They are giving their tasks to a third-party provider to decrease their costs and to raise the productivity of the company. KPO refers to outsourcing, which relies on its highly skilled staff, transferring their knowledge and process with other companies.
It’s based onRulesKnowledge
Qualifications Not so qualified staffStaff with skills and knowledge
The focus is on Low level processesHigh level processes
Providing ServicesCustomer Support, Technical Support, Human ResourcesMarket research, Data analytics, Business research service

 

What is Business Process Outsourcing (BPO)?

Business Process Outsourcing or BPO is defined as outsourcing for non-primary activities. They are giving their tasks to a third-party provider to decrease their costs and to raise the productivity of the company.

There are two main areas of working: back-office and front-office functions.

The back-office includes services like human resources (HR) or quality assurance (QA). The front-office include services like marketing, technical support, and customer relation services.

Big companies often decide to outsource a business through different methods. They often need help from both front-end and back-end offices, because they can’t provide the resources to build the staff and to perform all those tasks.

A third-party provider can help them to complete the job for a low cost.

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Experts in the field of management are responsible to determine if giving a task to an outsourced provider can bring positive results to the company.

Other criteria are to identify objectives for outsourcing a function, such as a cost-saving or increasing the quality.

They also need to pass through a process of identifying the best vendor for the job.

Companies offer BPO services every day to other organizations and third-party providers. Based on the service provider location, they can be divided into:

  • Onshore outsourcing – this type of outsourcing means obtaining service from outside a company, but its location is in the same country.
  • Offshore outsourcing – obtaining service from outside a company, but its location is in a foreign country.
  • Nearshore outsourcing – obtaining service from outside a company, and the location is in some neighboring countries.
BPO Activities
 

What is Knowledge Process Outsourcing (KPO)?

Knowledge Process Outsourcing (KPO) means performing intensive activities or tasks based on knowledge in the field of business. Some of them are managing, research, consultancy, and analysis.

These types of tasks are outsourced by the staff of the other company or some subsidiary in the same organization.

KPO involves a lot of core activities. Companies utilize KPO because when they need staff with specialist knowledge and expertise in some field. Another benefit of choosing KPO is the cost-saving, by hiring a skilled worker from countries in development.

Skilled Knowledge Process Service provider can provide analytic solutions, such as studying the behavior, the mind and habits of the customer.

The information from these services includes the buying behavior of the customer, their preferences, market analysis and the information about the shares on the market.

These services can offer creative and innovative solutions for clients. It can help to keep track of the other competitors and manage their products.

They can improve the brand of the client’s business with certain marketing techniques and practices.

These are the type of KPO services:

  1. Data Analytics
  2. Business Research
  3. Research and Development
  4. Data Management
  5. Financial Research
  6. Legal Process
KPO Activities

Main Differences Between BPO and KPO

  1. BPO – Business Process Outsourcing; KPO – Knowledge Process Outsourcing.
  2. Business Process Outsourcing is defined as outsourcing for non-primary activities, such as human resources (HR), customer and technical support. Knowledge Process
  3. Outsourcing means performing intensive activities or tasks based on knowledge in the field of business. Some of them are managing, research, consultancy, and analysis.
  4. BPO companies don’t require high educational qualifications from the staff. KPO companies are only looking for workers with high educational qualifications.
  5. Business Process Outsourcing is performing its tasks based on rules. Knowledge Process Outsourcing is doing that based on insights.
  6. BPO has low standard collaboration and cooperation. On the other hand, KPO has high standard collaboration and cooperation.
  7. BPO is providing low-end services, while KPO is offering its clients high-end services.
  8. The tasks that BPO is performing for their clients are less complex, whereas the tasks that KPO is performing are more complex.
  9. BPO is relying on cost arbitrage. KPO demands an understanding of the business.
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How to Remember the Difference Between BPO and KPO

Time Needed : 2 minutes

Remembering the differences is very simple, just follow our mind mapping guide given below:

  1. Associate the first word with a thing or item which you see daily

    For e.g.: Middle line in letter H for Horizontal.

  2. Associate the second word with a thing or item which you see daily

    For e.g.: The two lines in letter V for Vertical.

  3. Recall the two words daily two times

    During morning and evening bring up the two words in front of you and then recall the things that you had associated with each word.

  4. Repeat for 7 days

    Repeating this process for a week will help you remember the difference between words for a long time.


 

Frequently Asked Questions (FAQ) About BPO and KPO

  1. How many types of BPO are there?

    The full form of BPO is Business Process Outsourcing. A BPO usually provides two types of services:

    a) Back office – includes the internal processes of business like purchasing, making a transaction, etc

    b) Front office – includes marketing or providing customer care activities to contracting company’s customers

    Other than providing these two services, the BPO industry is further divided into 3 categories.

    The 3 types of BPO are:

    a) Offshore – when a company’s vendors are from a distant foreign country

    b) Nearshore – when a company’s vendors are from a neighboring foreign country

    c) Onshore – when a company’s vendors are from the same country however they could be located in different states or districts.

  2. What is the difference between IT and BPO?

    BPO means outsourcing or contracting a third-party service provider to carry out the responsibility and operations of a specific business process.

    On the other hand, IT stands for Information Technology. They are mainly focused on services like solution development, providing software-based services like application support, etc.

  3. Is KPO a call center?

    The full form of KPO is Knowledge Process Outsourcing. A KPO is a call center’s subset.

  4. What are the types of KPO?

    Types of KPO services include:
    a) Business operations
    b) Research and development
    c) Legal
    d) Medical
    e) Financial consultants
    f) Data analysis and interpretation
    g) Technical analysis
    h) Investments

  5. Which is better KPO or BPO?

    BPO services focus on low-level processes. KPO services focus on high-level processes. BPO provides services like customer care, human resources, tech support, etc.

    KPO provides services like market research, data analytics, investment research, etc.

    The services provided by a KPO are more important and much better than a BPO.

    A person with good communication skills and any degree can work in a BPO but only a professional and expert can work in a KPO. Hence, KPO is better than a BPO.

  6. What is the qualification for a BPO job?

    The BPO industry demands that you hold a degree from an accredited institution in any field for jobs like customer care executive or sales executive.

    They may even take people with a high school diploma as an intern.

    However, for complex roles, a bachelor’s degree in science, statistics or math is required to depend on the nature of work and client.

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Infographic

BPO vs KPO

 

Learn More With the Help of Videos

Business Process Outsourcing (BPO)

Knowledge Process Outsourcing (KPO)


 

Conclusion

Outsourcing is an important part when it comes to a business decision. A lot of factors are important for making these decisions, such as cost and quality.

Many companies are outsourcing because with outsourcing they think their business will grow and be successful. They are hiring workers from the field of BPO or KPO to use their resources effectively.

It very important that KPO is just an extended version of BPO. With the expansion, BPO was slowly losing its existence.

But now, the service provider can provide both BPO and KPO services for organizing and supporting the companies who are in need.


 

Word Cloud for Difference Between BPO and KPO

The following is a collection of the most used terms in this article on the BPO and KPO. This should help in recalling related terms as used in this article at a later stage for you.

Word Cloud for BPO and KPO

 

References

  1. https://searchcio.techtarget.com/definition/business-process-outsourcing
  2. https://www.investopedia.com/terms/k/knowledge-process-outsourcing.asp

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