Global Business Outsourcing is big and only getting bigger! In 2024, the global market hit around $302.62 billion. It's expected to maintain strong growth, with a 9.8% annual growth rate from 2025 to 2030.
On the other hand, the KPO industry, which involves outsourcing high-level knowledge-based tasks like research and analytics is also booming. From $110.69 billion in 2024, the market is forecast to hit nearly $400 billion by 2034.
Reports profoundly indicated how strategic outsourcing is becoming part of long-term growth plans for businesses. More and more companies, especially in banking, tech, telecom, and healthcare, are outsourcing tasks to save costs and win competencies. [Source]
While BPO and KPO might sound similar at first, they serve different purposes and require distinct expertise. Understanding BPO vs KPO can help companies choose the right outsourcing model.
So, let’s discover the KPO and BPO difference regarding scope, benefits, and overall value delivery!
KPO and BPO Differences: All You Need to Know
What is BPO?
BPO full form: Business Process Outsourcing refers to the practice of contracting specific business operation to third-party service providers.
BPO boasts outsourcing of front-end services and back-office operations. For example, BPO companies can handle call center services, customer help desk, 24/7 support, and assistance. While business process outsourcing companies can also tackle complex back office tasks like finance, HR, IT & marketing support, or AI automation.
BPO services providers build long-term partnerships. They solve business operation critical challenges to help companies stay agile, customer focused and competitive.
What Does BPO Tasks Include?
The name BPO itself refers to it taking care of business processes i.e., executing tasks such as:
Inbound and outbound call centers: handling customer queries, order taking, and follow-ups.
Multichannel Support: Live chat, email, social media, and SMS support to resolve product issues, billing questions, and general requests.
Data entry Processing: Migrating records and managing databases
Financial BPO outsourcing: Managing accounts receivable and payable, payroll processing, and financial reports.
What are the Types of BPO?
BPO services can be categorized into the following major categories:
Onshore BPO
BPO process outsourcing to a company based out within the same country. It facilitates time zone gaps and cultural alignments.
Off Shore BPO
Contracting with providers for BPO services in a neighbouring or nearby country. It facilitates fewer cultural differences and balances costs.
Nearshore BPO
Outsourcing BPO services to the companies located overseas or in any low-cost regions. It facilitates huge saving and high efficiency.
Benefits and Value Propositions of BPO
The vital advantages organizations realize when they engage quality BPO partners include:
Cost Reduction
57% of companies outsource processes for cost reduction. BPO reduces costs by 60%. Process outsourcing to third-party contractors replaces the needs of in-house infrastructure, including space cost, employee hiring, training, and overhead expenses. As a result, it leads to cost reduction.
Shift to Flexible Model
49% of businesses contract BPO providers as it facilitates their shift to a more flexible and scalable model. It will aid your company's response to seasonal demand and market shifts more efficiently.
Scope to Focus on the Core
Your team will get more free time by delegating routine or administrative tasks like payroll, call center operations, or data entry to BPOs. They can utilize these free times to improve the core business functions and enhance core competencies.
Improved Process Efficiency and Quality
Established BPO providers employ standardized workflows, SLAs, and continuous improvement methodologies. It allows faster turnaround times and facilitates higher accuracy levels.
Challenges of BPO
A report showed that most companies choose outsourcing partners based on three focus areas: Industry experience, price, and team diversity. The real challenge comes here as finding such a potential BPO partner feels like an uphill battle. 22% of company executives may also consider cultural impact due to third-party selection. 35% of companies also showed concern about data exchange. Another challenge of BPO is accessing RFI. It refers to Request for Information. RFI data indicates the delivery quality of the BPO company.
Beyond these critical challenges, many companies may also face some manageable problems:
- Communication barrier due to cultural and language context
- Access control or compliance
- The end result falls short of quality control issues
- Misalignment of business model and work culture
- Confusion and delays due to the intense transition phase
What is the KPO ?
KPO full form: Knowledge Process Outsourcing. KPO refers to contracting high-value data and information-driven critical tasks. It requires specialized knowledge, domain expertise, and analytical skills. KPO involves more judgment-based complex functions.
Organizations can choose to outsource KPO services to third-party vendors. Many companies delegate them to their own subsidiaries. Depending on cost and resource-saving goals, that subsidiary might operate within the same country or be offshore.
What Do KPO Tasks Include?
KPO does not boast any routine; it takes care of specialized services. The core functionalities of Knowledge Process Outsourcing (KPO) services include-
Market Research and Analytics:
In-depth analysis of markets, consumer behavior, and trends to support business strategy and decision-making.
Financial services:
High-end financial modeling, investment research, equity analysis, and risk management for banking and finance sectors.
Intellectual Property (IP) Services:
Patent research, IP analytics, trademark searches, and documentation.
Engineering and IT Services:
product lifecycle management, simulation, analysis for engineering firms, customized software development, and IT consultations.
Data Analytics and Data Mining:
Extracting insights from large volumes of data to support forecasting, customer segmentation, and strategic initiatives.
Medical and healthcare services:
Clinical research, medical billing analytics, healthcare data management, and claims processing.
Content Development:
Technical writing, marketing copies, academic research, e-learning content, and documentation for specialized industries.
What are the types of KPO?
KPO services have become a broader term as every professional offers services in their expert arena. But the significant types of KPO include:
Innovation
Innovation refers to the continuous improvement of processes, services/products. It also boasts the flexible shift of business models using knowledge-based insights. KPO service providers often use advanced technologies like AI, automation, and data science to develop innovative solutions tailored to précised requirements.
Market Research
Market research is the process of gathering, analyzing, and interpreting information about a market. This KPO task is vital when companies need insights into customer references, choices, or behaviors before launching a new product or service.
In the KPO industry, market research is a high-value service. It has major segments, including primary research, secondary research, competitor analysis, SWOT analysis, and consumer behavior analysis.
Global Reporting and Performance Management
Contracting for this knowledge-based task refers to data analysis and reporting of performance across various regions and business units. It allows stakeholders to monitor the health of their business at a global scale. It also aids in improving strategy and addressing performance benchmarks.
Data Analytic and Management
This KPO service area covers the full data lifecycle: collecting data from multiple sources and analyzing it for trends and patterns. It improves leverage on data analytics to help organizations make strategic choices, personalized customer experiences, and gain a strategic edge.
Benefits and Value Propositions of KPO
Understanding the benefits of KPO will help you cover half the way to get deep insights into where BPO and KPO differ.
Access to Specialised Expertise
49% of executives agreed to opt for KPO services to achieve new capabilities. So, deep domain knowledge and high-quality expertise help them.
High-Value Output
High-end intellectual property brings innovation and adds high value to the output. It stands out your product or services in the market.
Faster Turnaround Time
45% of executives rely on outsourced services to stay ahead in the complex and changing compliance requirements. KPO firms can cater to these needs well as they already have expertise. It facilitates faster turnaround time and go-to-market accelerations
Cost efficiency, Scalability, and Efficiency
Outsourcing provides significant cost savings as you can engage professionals as per your budget flexibility. It takes less cost compared to hiring full-time employees.
Challenges of KPO
One of the major challenges of KPO is getting a team that delivers high-quality standards. Talent pool access and retention are challenging in finance, legal, analytics, and healthcare. Another critical challenge is compliance with industry standards. Unless the KPO solutions provider has experience working with that compliance framework, they cannot deliver results.
Many companies also face challenges related to intellectual property rights and data security. Some face project delays due to conflict over time zones and two-way communication difficulties.
KPO and BPO Differences
KPO and BPO differences lie on various points including work scope, segments, and skill requirements. BPO service providers carry out front desk and back office business process as representative of clients. BPO services boast only task executions under the pre-implemented framework and under clients’ authorization.
On the other hand, KPO experts take care of the knowledge-driven tasks that come beforehand, making strategic roadmaps and decision-making or expanding companies' core capabilities. These are conducted as individual efforts, keeping clients' goals and expectations in mind.
Wrapping up on BPO Vs KPO: Which one is Right for your Business?
Choosing between KPO and BPO depends heavily on your business goal. First, you must understand your specific needs: critical problems in business requirements, operational goals, and the complexity of the task you need to outsource.
So, when should you choose the BPO process? If we take it in a broader sense, it suits the requirements for:
- Process driven tasks
- Repetitive tasks
- Quicker internal operation
- Cost reductions
- Choose KPO in case you need:
- More strategic value
- Innovation in the core business area
- Competitive intelligence
What’s Next?
We hope that, from the above discussion, you have already understood the difference between BPO and KPO.
Now, It’s time to take the right step by choosing a reputable service provider for KPO.
You can trust TTC! With years of experience in technology, software, app innovation, marketing technology, and IT consulting, we can help you get high-quality and reliable knowledge Process Outsourcing services!
Do you need more insights on how we provide business solutions? Book a free consultation with our team today to ask anything!
