Difference Between BPO and KPO


BPO is today a commonplace word or acronym that most of us understand. However, of late, there is another term that has emerged in the knowledge or information sector called KPO; it is pretty much similar to what BPO stands for. This is what confuses many as they cannot differentiate between BPO and KPO. Despite ostensible similarities, there are many differences between BPO and KPO, which will be highlighted in this article.

To understand the differences between KPO and BPO, it is prudent to understand BPO first. BPO stands for Business Process Outsourcing and refers to handling of back office activities in foreign countries at cheaper rates. The trend started in late eighties when western countries handed over less critical activities and operations to companies in other countries, where labor rates are low, also skilled workers are available in large numbers and at much less wages than employees demand in their own countries. Data entry, employee payroll, call centers are some examples of BPO operations, which though not exactly IT based, require basic technical knowledge on the part of employees in foreign countries.

KPO is a rather new term that refers to Knowledge Process Outsourcing. As the name implies, KPO involves much deeper knowledge and expertise and the people involved in this sector are business experts having long experience.

To a casual observer, BPO and KPO might look the same, but there are many differences in activities, emphasis, processes, client contacts and specialization. While BPO is simpler involving low level processes, KPO is involved with high level processes such as investments, legal matters, and dealing with patent issues. In BPO, it is the process that is emphasized whereas, in KPO, it is the application of knowledge. High level of specialization is not required in any specific area, and excellent command over English language and basic computer skills are all that can make one successful in BPO sector. In sharp contrast, employees in KPO sector are required to have in depth knowledge in specific areas such as investment analysis and legal matters. It is common to see CA’s and MBA’s working in KPO sector.

What is the difference between BPO and KPO?

• KPO stands for Knowledge Process Outsourcing, whereas BPO stands for Business Process Outsourcing.

• KPO requires specialized knowledge, whereas BPO requires good communications skills and basic computer knowledge.

• KPO employees engage with international clients often, whereas BPO workers rarely deal with international clients.

• KPO is an extension of BPO, and BPO is a simpler form of KPO.

• When outsourcing is done in KPO through developing nations, profits to developed nations are double than that in BPO.

• From the perspective of developing countries, KPOs are better earners of foreign currency. On an average, BPO earns $11 per hour for the country, whereas KPO makes the country richer by $24 every hour.