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:
| Category |
Traditional BPO |
KPO |
|
| Primary client motivation | 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 Transactional |
Core High complexity Non-transactional |
|
| - | |||
| 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 Transcription |
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: Pat Keegan
Pat Keegan serves as Infinit Outsourcing Inc.’s Vice President for Strategic Solutions. Pat is a highly accomplished executive with extensive expertise in operational responsibilities across multiple functions and technologies. He has led large, mature organizations and planned, developed and launched new operations at startups. His key areas of expertise include global outsourcing, social media, strategic planning, professional services management, customer service management, process/quality management, and building sustainable high performance teams.
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