Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) are two very different types of outsourcing. Many people don’t know the difference between the two and end up confused about what to choose for their business. In this blog post, we will discuss the major differences between BPO and KPO, so that you can make an informed decision about which type of outsourcing is right for you.
What is a BPO company and what does it do?
A Business Process Outsourcing (BPO) company is a firm that contracts with another company to provide services that could be performed by in-house staff.
BPO companies can provide a variety of services, but the most common ones are:
- Customer service
- Technical support
- Data entry
BPO companies usually have large call center operations with hundreds or even thousands of employees. The employees of BPO companies are often located in countries where labor is cheaper than it is in the company’s home country. Advantages of using call center services, like those of Global Response include savings by not needing to rent out office space for a call center team, they offer multi-language services, and you know you have well-trained staff handling your day-to-day customer service calls.
To further explain this concept, here is an example:
- A U.S.-based company might contract with a BPO company in India to provide customer service for its products.
- The Indian BPO company would then hire customer service representatives who would work in a call center and provide customer service to the U.S.-based company’s customers.
- The U.S.-based company would save money because it would not have to pay for the overhead of running a call center, and it would also save money on labor costs because the wages of Indian workers are usually lower than the wages of American workers.
- BPO companies are sometimes criticized for taking away jobs from workers in developed countries, but they can also be praised for providing employment opportunities to people in developing countries.
- BPO companies can be very beneficial to businesses, but there are also some drawbacks that you should be aware of.
Let’s take a look at some of the cons of business process outsourcing.
- Quality Control Issues: When you outsource your business processes, you’re essentially giving up some control over how those processes are performed. This can lead to quality control issues if the BPO company you’re working with doesn’t have strict quality control measures in place.
- Language Barriers: Another drawback of BPO companies is that there can be language barriers between you and the workers at the BPO company. This can make communication difficult and may lead to misunderstandings.
What is a KPO company and what does it do?
KPO is an acronym for knowledge process outsourcing. It is a type of business process outsourcing (BPO) where higher-level, knowledge-based work is outsourced.
This includes tasks such as:
- Research and analysis
- Product development
KPO companies are usually hired by organizations to provide expert services that would otherwise be costly to develop internally. Some of the benefits of knowledge process outsourcing are that by leveraging the expertise of a KPO company, businesses can save time and money while still accessing quality services. They can also free up existing staff to do other tasks and reduce costs by creating different processes to be efficient.
There are many different types of KPO companies, each with its own areas of specialization. Some common examples include market research firms, financial analysts, and software developers. When choosing a KPO company, it is important to select one that has experience in the specific industry or field that you need assistance with. This will ensure that you receive quality services and results.
While KPO companies can provide a variety of benefits, there are also some potential drawbacks to consider.
- Intellectual Property Theft: When sensitive information is outsourced to a third party, there is always the risk that it could lead to intellectual property theft. This could have serious consequences for your business, so it is important to weigh the risks and benefits carefully before outsourcing any work.
- More Expensive: This is because knowledge-based tasks tend to be more complex and time-consuming than simple business processes. As a result, KPO companies usually charge higher rates than BPO providers. However, the increased cost can often be offset by the improved quality of work and results that KPO companies can provide.
The major differences between BPOs and KPOs
So what are the major differences between these two types of outsourcing? Let’s take a look:
- BPOs are typically less expensive than KPOs since they require less knowledge and expertise.
- KPOs can be more complex and time-consuming than BPOs, so they often require a higher level of commitment from both the company and the service provider.
- BPOs usually have lower barriers to entry, which means that companies can start using them more quickly and with less risk.
- KPOs often require a longer-term commitment from both parties involved, as they can take longer to see results.
As you can see, there are some major differences between these two types of outsourcing. If you’re not sure which one is right for your business, it’s always best to consult with an expert to get started.
Which type of company is right for you or your business?
This is a difficult question to answer. It depends on the specific needs of your company or business. If you need highly specialized services, then a KPO may be a better option. However, if you need more general services, then a BPO may be a better choice. You will also need to consider the cost of each type of company. KPOs tend to be more expensive than BPOs.
In the end, it is important to do your research and make the best decision for your specific needs. There is no one-size-fits-all answer when it comes to choosing between a BPO and a KPO. Whichever type of company you choose, make sure that they are able to meet your specific needs.
So, what are the major differences between BPOs and KPOs? The most obvious difference is that BPO companies provide services such as customer service, whereas KPO companies offer more complex services such as legal research or financial analysis. If you’re looking for a company to handle your simpler business needs, go with a BPO. But if you need more complex support or want to outsource your entire back-office operation, then a KPO is the better choice. Do some careful research to find the right fit for your business!