Outsourcing, a business strategy which originated in the 1960s, is widely used by a wide range of industries. Outsourcing solutions provide firms with easy, flexible access to skilled external service providers to perform various tasks, which improves efficiency, streamlines various internal processes and workflow, saves time and costs, and boosts productivity. Outsourcing also allows firms to focus on their core business activities. Many organizations use both Knowledge Process Outsourcing (KPO) and Business Process Outsourcing (BPO) to improve competitive advantage.
What is the difference between Knowledge Process Outsourcing solutions and Business Process Outsourcing Services?
Knowledge process outsourcing: KPO involves contracting out core, information-related business activities to subject matter experts.
- Knowledge-intensive work or high-level tasks are outsourced to qualified individuals with advanced expertise in a specialized area.
- KPO is useful for companies seeking specialized knowledge and expertise in a particular field and do not have employees with these skills on staff.
- The third party vendor is often located in a different geographic region than the company seeking the service.
- KPO is considered an ideal option to obtain access to highly skilled personnel at a lower cost.
The main objective of the KPO industry is to provide clients with value-added services and useful insights that can support them in strategic decision making, and improve efficiency.
KPO services include:
- Data analytics and interpretation
- Business operations (management consulting)
- Business research
- Market research and competitive intelligence
- Investment research activities
- Technical analysis
- Legal process outsourcing
- Financial consultation services – banking, securities, and insurance
- Research and development (R & D)
- Healthcare and medical (medical billing and underwriting, evaluation of medical tests, research and development)
- Remote education, writing content and publishing
- Engineering design
- There are two BPO categories: ‘front-office’ BPO and ‘back-office’ BPO. While front-office BPOrefers to customer-facing functions such as sales, customer support, and marketing, back-office BPOcovers internal functions such as finance, tax planning, and Human Resources (HR).
- In onshore BPO, the outsourcing company provides services to another company within the same country. Offshore BPOrefers to providing outsourcing services for a client located overseas.
- Customer care – call center, help desk
- Technical support
- Data entry
- Document conversion
- Document scanning
- Data entry
- Document conversion
- E-pub conversion
- Finance and accounting services
- Website services – web hosting, website maintenance, updating, etc.
- Customer care, i.e. call center, help desk, etc.
- Human resources — recruitment and selection, training and placement, payroll processing, etc.
- Supervising procurement
- Transcription – medical, legal, general business, etc.
Business Process Outsourcing: BPO is the outsourcing of non-core tasks to an external service provider. Business process outsourcing solutions focus on the functional areas of a company rather than on specific tasks.
BPO services commonly include:
BPO eliminates complexities and costs of employment in multiple areas — legal, recruitment, compliance, taxation, health care and office management. Leveraging BPO helps companies lower costs and get their voluminous tasks like data entry and document conversion work completed efficiently and in quick turnaround time.
Differences between KPO and BPO
While both KPO and BPO support the business activities of an organization, they are distinct differences between them.
|Outsourcing knowledge-intensive work or high-level tasks to qualified individuals or subject matter experts to obtain value-added services at lower costs||Outsourcing non-core tasks or business activities to an external service provider to lower costs, save time and improve efficiency|
|Outsourced processes are highly specialized and complex||Outsourcing solutions focus on the functional areas of a company and are less complex than KPO|
|Needs specialized knowledge and expertise in specific areas||Process-oriented, needs process and technical expertise|
|High-end services||Low-end services|
|Based on judgment||Based on rules|
|Requires high coordination and collaboration||Involves low coordination and collaboration|
|Depends on knowledge arbitrage||Depends on cost arbitrage|
KPO and BPO — Global Market Trends
According to ResearchAndMarkets.com, the global market for KPO, which was valued at US$53.9 billion in 2020, is expected to reach a US$156.5 billion by 2027, growing at a CAGR of 16.5% over the analysis period 2020-2027. The need for businesses to achieve operational efficiency and add strategic value to their products and services are the prime factors driving the growth of KPO. It can help them deal with rapidly evolving business scenarios, according to ibef.org.
A Grand View Research report estimated that the global business process outsourcing market was valued at USD 245.9 billion in 2021 and is projected to expand at a CAGR of 9.1% from 2022 to 2030. The report identified the factors driving the demand for business process outsourcing solutions as the increasing focus of organizations on improving efficiency and business agility, decreasing operating costs, and emphasizing core competencies to survive the constantly changing business dynamics.
|Read about – What is KPO? How is it Different From BPO?|
Both KPO and BPO help firms save costs, focus on core business activities, improve operational efficiency, and get access to skilled manpower and better resources. KPO is considered a subset ofBPO and leading business process outsourcing companies also offer KPO solutions. Regardless of the outsourcing services you require, it’s important to choose a reliable third party provider with extensive expertise in the area.