What is the Difference Between BPO and KPO?
🆚 Go to Comparative Table 🆚BPO (Business Process Outsourcing) and KPO (Knowledge Process Outsourcing) are two types of outsourcing services that companies often employ. While both involve contracting with a third-party service provider to handle certain business functions, there are key differences between BPO and KPO:
- Focus: BPO primarily focuses on reducing costs by outsourcing routine or peripheral business functions, such as customer care, technical support, and sales. On the other hand, KPO focuses on providing knowledge-based services, such as data analytics, research, and information technology, to support core business functions.
- Skills: BPO requires good communication skills and basic computer knowledge. In contrast, KPO requires specialized knowledge and skills, which may not be readily available within the organization.
- Complexity: BPO deals with low-level processes and is less complex than KPO, which involves high-level processes and is more complicated.
- Coordination: BPO needs low coordination and collaboration, while KPO requires high coordination and cooperation.
- Staff Requirements: For BPO, good communication skills staff is required, whereas qualified professional staff is needed for KPO.
- Decision Making: BPO is based on rules, and the staff is usually required to take low-level decisions and perform routine tasks. In contrast, KPO is based on judgment, and the staff has significantly more operational control and can optimize or change key processes.
In summary, BPO is focused on cost reduction and deals with routine or peripheral business functions, while KPO is focused on providing knowledge-based services in support of core business functions. The skills, complexity, coordination, and staff requirements are different for each type of outsourcing service.
Comparative Table: BPO vs KPO
Here is a table summarizing the key differences between Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO):
| Feature | BPO | KPO |
|---|---|---|
| Meaning | BPO refers to the outsourcing of non-primary activities of an organization to an external provider. | KPO is another kind of outsourcing where processes involving knowledge-related work are handed over to an outside party. |
| Nature of Services | BPO involves outsourcing routine, process-driven tasks. | KPO focuses on tasks that require advanced analytical and technical skills, such as data analytics and information technology. |
| Complexity | BPO has a low degree of complexity compared to KPO. | KPO is more complex than BPO. |
| Basis for Outsourcing | BPO depends on cost arbitrage. | KPO depends on knowledge arbitrage. |
| Expertise Required | BPO requires process expertise. | KPO requires knowledge and expertise. |
| Coordination and Collaboration | BPO requires low coordination and collaboration. | KPO requires high coordination and cooperation. |
| Insights-Driven vs. Volume-Driven | BPO is volume-driven. | KPO is insights-driven. |
In summary, BPO primarily focuses on reducing costs by outsourcing routine, process-driven tasks, while KPO focuses on providing knowledge-based services that require advanced analytical and technical skills. KPO is considered a subset of BPO but involves more specialized and knowledge-based services.