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Difference between BPO and KPO

Difference between BPO and KPO

Published on May 26, 2020

Minimizing in-house monetary inputs by outsourcing peripheral as well as generic business processes has now become the new normal for businesses across the world. There are wide ranges of international BPO and KPO service providers in India that are ready to take up outsourced services for almost all sectors and from all industries. 

The major benefit is the cost reduction and service quality that outsourcing companies provide. The companies that take up such work as external partners, hold experienced personnel and teams to deliver high-end and highly qualified solutions for the outsourced services that would otherwise not be as efficient as in-house teams or would burn a major hole in the organization's pockets if not outsourced.

Before finalizing to outsource certain business operations it is essential for the organization and the staff to understand the basic difference between various outsourced processes and the manner in which they proceed. The most dilemmatic situations arise due to confusion between the meaning of BPO and KPO.

Move ahead and know the difference!

What is BPO?

In the most generic manner, BPO services can be understood as business process outsourcing, the meaning that has given it the abbreviation BPO. Business process outsourcing services relates to the outsourcing of certain functions, processes for the segments of an organization working to third parties that are given the responsibility to handle those services on the parent organization's behalf.

Organizations across the world are considering BPO services in view of reducing costs, maximizing efficiency, and getting high and solutions delivered for their organization without having to assemble an internal team for that purpose.

What are the types of BPO companies

There are three major types of business process outsourcing companies, namely the on-shore BPO, nearshore BPO, and offshore BPO. The categorization of BPO companies here is based on the demographics of the third parties.

  • On-shore BPO

BPO business process outsourcing companies that cater to the outsourced business processes and offer their services belonging to another company that is located in the same country are known as onshore BPO services.

  • Nearshore BPO

Nearshore BPO companies are those that handle business activities of a specific organization situated in a nearby region thereby being named as nearshore BPOs.

  • Offshore BPO

when a domestic company outsources its business activities or a segment of its business processes to a BPO company that is located overseas, the overseas partner facilitating services are referred to as offshore BPO. Taking an example, if an American company headquartered at New York outsourcers its business process to an Indian company then the Indian company would be called offshore BPO pertinent to the outsourced BPO services to Delhi, India by that American company.

Services offered by a BPO

BPO companies serve back end and front and processes of any e-business unit and serve a wide variety of services some of which are listed further:

  • Human resource services such as training and placement, payroll processing, recruitment and selection, screening, etc.
  • Medical transcription
  • Web hosting and other services that are website based
  • Accounting and finance based services
  • Technical support
  • Helpdesk, customer care, call centers, etc

Read Also: Reasons to Outsource BPO Services

What is KPO?

Knowledge process outsourcing servicesoften abbreviated as KPO explain the assignment of information and knowledge related processes to third party organizations that work on the assigned processes on the parent company's behalf. The KPO is an entity different from the parent company which is outsourcing the process; it could also be the subsidiary of the parent organization which might be located in different or the same country aimed at the minimization of costs by doing so.

To understand the difference between BPO and KPO you can take into account the notion that KPO services can be explained as a more advanced version of BPOs. The KPO companies carry out the various high-level tasks that require the involvement of highly skilled personnel.

Majorly, the KPOs work on processes that require major knowledge-based decision making however they do take up lower-level decisions and related processes as well.

In view of high-end knowledge-based processes, the KPO employees hold expertise in domains, in-depth knowledge, commendable judgment and interpretation powers, experience, and specific knowledge.

Why KPO?

The key services offered by knowledge process outsourcing organizations include:

Key Differences Between BPO and KPO

Accumulating the differences between BPO and KPO unit, it can be concluded that a business process outsourcing unit provides services like customer care, technical support, inbound telemarketing, sales with the help of voice processes, etc whereas a knowledge process outsourcing unit offers services related to analysis and expertise about complex and in-depth areas.

The employees that are recruited by business process outsourcing units require basic computer knowledge and communication skills whereas the employees recruited by KPO companies are required to have specialized knowledge in particular domains and should be equipped to cater to knowledge-based needs.

BPO's services are categorized as low-end services, KPO's services are high-end and specialized.

Business process outsourcing units serve expertise in the fields where function management is required. In the case of knowledge process outsourcing units, the service is provided in the knowledge domains.

BPOs and KPOs rely on cost arbitrage and knowledge arbitrage respectively.

Another difference between these two entities is that the business process outsourcing companies work on rules whereas the knowledge process outsourcing units work on the basis of insights as the BPOs have to handle a low degree of complexities whereas the KPO units manage complexities of higher degrees.

Conclusion

Business outsourcing has become the new day technique undertaken to provide precision and efficiency in business processes while countering increasing costs. Multiple organizations across the globe are outsourcing peripheral processes to beneficial BPO service providers in India so that they can divert the essential resources and priorities towards the core business activities.

KPOs and BPOs are found consorting with each other in terms of their importance for organizations. There are, in fact, many organizations that are providing both of these services simultaneously.