Knowledge Process Outsourcing (KPO) and Business Process Outsourcing (BPO) are 2 confusing terms for a person with no knowledge about the outsourcing industry. If you too belong to that category with less to no knowledge about outsourcing, it is the right time to know about the industry. This blog will give you a fair idea on both KPO and BPO. Read on.
The word BPO stands for Business Process Outsourcing. When a business or an organization wants to get done a few of its tasks on a constrained budget, they often decide to outsource these tasks to an efficient team in another country. This is called as business process outsourcing and is usually made between 2 countries.
Outsourcing the business process is a great economic strategy by which organizations reduce the overall business cost. This has also helped developing nations to generate more jobs and revenue. A robust global telecommunication channel is the base for the BPO industry.
The five BPO hotspots of the world are India, China, Mexico, the United States and the Philippines. In an exclusive book titled ‘Essentials of Business Process Outsourcing’ written by Thomas N. Duening and Rick L. Click, it is cited that many economists and researchers blame the outsourcing trends for the increased unemployment in the USA.
From a business perspective, why wouldn’t they grab the opportunity to run their businesses within a small budget? The advantages of the BPO industry that attracts businesses are many and the major ones are; cost reduction, easy accessibility to a pool of highly talented professionals, better time management opportunity, provision to run a company 24/7 and opening up doors to a new market.
According to the historians, it is during the industrial revolution that manufacturers started outsourcing the production of their goods to other countries and today there is no limit to the kind of tasks that a BPO industry handles. From administrative tasks to customer support services, bookkeeping, telemarketing services, data conversion services, form processing services and research tasks, the list is never-ending.
According to a study conducted by Grand View Research, Inc., the global business process outstanding market size is expected to reach USD 343. 2 billion by 2025 at a 7.4% CAGR. The next level of BPO or there currently exists a new extension of BPO and it is termed as BTO, Business Transformation Outsourcing.
The most apt definition is found in a whitepaper published by Accenture titled ‘ Business Transformation Outsourcing: Partnering for Radical Change’ and the definition is stated as ‘ A program to transform the way a business works, enabled by outsourcing, to achieve a rapid, sustainable, step change improvement in enterprise-level performance’.
As the definition suggests, in Business Transformational Outsourcing, a definite set of tasks with specific goals is assigned. Making it further simple, Business Transformation Outsourcing is nothing but a business outsourcing multi-process outsourcing and very often, the full process itself.
When businesses outsource data-driven activities which involves gathering, managing, analyzing and delivering intense knowledge, the process can be termed as KPO. KPO is the short form for Knowledge Process Outsourcing (KPO). In general, a KPO handles 4 types of activities. Data analytics and insights, market research, global reporting, performance management and data management.
It is usually medical, legal, investment, technical, research and development information that is outsourced to a KPO industry. When a business is in search of a skilled set of people who can be hired to improve the efficiency and productivity, they contact the best KPO service providers.
If one follows the current trends in the industry, it is noticeable that there is a sudden demand for academicians and highly talented professionals who are subject matter experts in their fields. According to a recent NASSCOM report, India will acquire 70% of the total global KPO industry.
Availability of highly qualified professionals ready to work within a budget may be one of the reasons for this paradigm shift of the conservative view that most talent belongs to the developed nations. The outsourced KPO tasks are mostly of primary importance.
The great advantages of a KPO that business tap in for their benefits are cost-effectiveness, easy access to subject matter experts and better utilization of resources.
However, those who believe in the traditional way of handling all the process within the safety of its walls, hesitate to believe in the effectiveness of the KPO industry despite its clearly mentionable positive aspects. Lack of confidentiality, risk of sensitive data leakage, the possibility of hidden charges, etc. stops them from believing in the KPO industry.
What one should understand is that KPO is a subset of the BPO industry where more specialized and knowledge-based work is outsourced. So, even if a KPO deals with highly sensitive data of businesses they are done cautiously like how BPO does the tasks.
According to Garner Insights, market intelligence and consulting firm reveal that the market size of KPO industry is expected to reach a million US$ by 2025.
Differences between BPO and KPO
The below Table showcases the key differences between BPO and KPO.
BPO stands for Business process outsourcing.
KPO stands for Knowledge process outsourcing.
The industry is based on cost arbitrage.
The industry is based on knowledge arbitrage.
Volume driven work culture.
Insights driven work culture.
Qualified professionals work in the BPO industry but expertise not required.
Highly Skilled Employees or Subject Matter Experts work in the KPO industry.
Number of job opportunities opening up are very high.
Job opportunities in KPO are limited.
Though, this blog is dealing only with BPO and KPO, the outsourcing industry is bifurcated into various other processes such as RPO (Recruitment process outsourcing), IPO (Initial public offering outsourcing), LPO (Legal Process Outsourcing), etc. Looks like in the next decade, nobody is going to micromanage a team or run a big company spending lots of money and investing in resources.
Outsourcing is the new cool and the trend is clearly visible. It is not that entrepreneurs are not talented to deal all the process within a roof, but they have understood that by dividing work with the talented people who are managed by an efficient process outsourcing company, tasks get done easier at a lower cost.
It is not just big business giants but also small businesses that make use of this opportunity. Before deciding to outsource one should determine the strengths and values of the business and should have a clear picture of the nature of the tasks.