DATE POSTED: 02/04/2013

I have been asked several times to explain the difference between Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO), probably because I use the terms freely and KPO has emerged as a solid service option amongst global offshore outsourcing firms.

KPO could be considered as a subset of BPO since they both pertain to outsourcing business processes. Yet there are significant differences between BPO and KPO, typically in the areas of client motivation, type of process, skill requirements and work characteristics. I have attempted to capture the differences in the table below:


Traditional BPO


Primary client
Unit cost reductions
Focus on core business
Time to value/ability to scale
Capacity management
Reduce time to market
Leverage knowledge/expertise
Improve quality
Typical process  Non-core
Low-medium complexity
High complexity
Skills and work characteristics Entry level to semi skilled
Rules based
Somewhat repetitive
Task/process focused
Collaboration – low/medium
Coordination – low/medium
Professional or domain expert
Judgment based
Project management
Goal focused
Collaboration – high
Coordination – high
Common processes (sample) Accounting/bookkeeping
Data mining
Medical appointment setting
Financial analysis
Research/Business Intelligence
Medical claim management
Database management

Clearly, these are generalizations and there can be many exceptions. In fact, at times positions can be a blend of Business Process Outsourcing and Knowledge Process Outsourcing. But I think, in many cases, these descriptions are directionally correct.

I hope this provides some clarity around the differences between these two forms of outsourcing and would welcome upgrades and comments.

Author: Outsourcing Insider

Outsourcing Insider consists of a team of regular blog contributors who writes topic about outsourcing and its relation to other industries like social media, finance, healthcare, sales and marketing, contact centers, and data and research.