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BPO vs KPO: Understanding Their Fundamental Differences

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Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) are the two most common types of business outsourcing solutions that companies use as today’s modern ways to improve business activities. Hence, the choice between hiring BPO vs KPO services has been constantly on the rise for years and years now. However, how does a firm really choose between the two, given their unique forms, perks, and goals?

In this guide, we’ll walk you through the basics of BPO and KPO, the various types under each, their main contrasts, and why you should look into hiring outsourcing services in the Philippines.

What is BPO?

BPO refers to the method of hiring a third-party service provider to perform certain business processes on your behalf. In essence, a BPO firm takes charge or owns such tasks to help the client improve functions, save on labor costs, and gain access to skilled staff.

How does BPO work?

Hiring BPO services and the reasons behind it vary from one business to another. Also, the type, size, and age of a business affect the decision to make when choosing between BPO vs KPO.

Startups and small firms may need to outsource their back- and front-office tasks due to their limited in-house resources. On the other hand, large firms may choose to hire BPOs if they find it to be cheaper and more efficient in the long run.

How does it differ from KPO?

KPO requires high-level domain expertise and a deeper understanding of the industry as compared to BPO, which mainly relies on a set process and rules.

A dice of letters forming BPO

Types of BPO

Based on a firm’s business needs, the kind of BPO service it must hire may be unique and should be tailored-fit to achieve its goals. Often, business functions that are outsourced are grouped into two:

What is KPO?

KPO, on the other hand, centers mainly on knowledge-based tasks and functions. Often, these are data-driven, needing an in-depth process to gather, manage, analyze, and present objective business insights. Further, firms hire workers from third parties who have core areas of expertise to perform certain tasks.

Types of KPO

The KPO services that outsourcing firms offer vary based on their level of expertise and the complexity of the business needs. Nonetheless, the most common examples include these:

BPO vs KPO: Difference Between BPO and KPO

Gauging the value of BPO vs KPO on your business can be quite a tough process to go through. Choosing the best service that suits your business needs well not only will impact how you complete tasks; it will also affect the long-term goals and results you’ll reap. Here are some difference between BPO and KPO.

BPO vs KPO infographics

Download a copy of the BPO vs KPO infographics.

Scope and Focus

BPO often follows a set of processes and rules. In addition, it focuses on low-level processes and business tasks. It aims to provide services like customer care, technical support, and sales, among others.

On the other hand, KPO highlights the knowledge, expertise, and judgment of the hired staff. With this, it takes charge of tasks that need in-depth skills and complex analysis, such as legal services and market research, to name a few.

Complexity

While BPO is deemed less complex, it’s also driven by volumes and needs outsourced staff to have expertise in the process. Hence, this type requires a low level of coordination and collaboration.

As compared to BPO, KPO is more complex in such a way that it entails extensive knowledge and asks workers in this field to deal with expertise and experience. Thus, KPO is insight-driven and needs a fairly high level of coordination and collaboration.

BPO staff that is trained with communication skills and providing service.

Staff

BPO firms hire workers that mainly have strong communication skills and basic computer knowledge. This powers the requirement of having expertise in processes to excel in BPO.

To compare, KPO workers have intensive skill sets and professional qualifications. Most of the time, they are hired for their specialized knowledge, as the nature of their services is more comprehensive and needs focused.

Process

Often, BPOs set fixed routine and pre-defined targets for their workers. This is so they can easily measure and deliver what’s expected of them.

In contrast, those working in KPO provide a more insight-based type of work, letting them report directly to the client in most cases. Hence, the kinds of tasks under KPO require ample knowledge of the business.

BPO Market Size

According to the Grand View Research, the global BPO market size was valued at USD 245.9 billion in 2021. Apart from that, it’s also seen to expand with a compound annual growth rate of 9.1% from 2022 to 2030. This key data can be referred to the rising number of firms looking to reduce the costs of conducting business, access global resources to provide world-class services, and keep on meeting the ever-growing market demands.

To sum it up, what factors drive the BPO market and its continuous growth? Some of these include:

  • Focus on improving business efficiency
  • Efforts to decrease business costs
  • Continuous change in business dynamics by highlighting core business strengths
business process outsourcing market infographics

Download a copy of the Business Process Outsourcing infographics.

Reasons to Outsource to the Philippines

The benefits of outsourcing top services that every firm or sector encounters may vary. Nevertheless, there are still a lot of common reasons why you should choose to hire BPO companies in the Philippines. To help you make the right decision, here’s a brief list of reasons to ponder:

1. Access to Skilled Pros

BPO vs KPO solutions offer businesses the flexibility and access to industry experience and skilled talent minus the extra hassle involved in recruiting, training, and onboarding new hires.

2. Higher Profit

One of the most common perks of hiring outsourcing services is being able to reduce costs in labor, process management, and other core business functions.

3. Usage of the Latest Tech

While large firms have the means to afford software programs, IT tools, and other technology needed to complete tasks, the same thing might not apply to small businesses and startups. BPOs and KPOs become greatly helpful in filling these gaps without requiring contracting firms to spend a huge deal of money.

4. 24/7 Staffing

With the support that this sector receives from the government and employers, it’s safe to say that the country is geared for a 24/7 work setup. Graveyard shifts, rotating shifts, and weekend schedules are common in Philippine BPOs and KPOs to cover the US hours and cater to foreign clients.

5. Topnotch Work Ethic

Filipinos are well-known for their excellence, integrity, loyalty, and value-driven work mindset. They’re also friendly workers, making them ideal as sole and team players. Apart from those, clients prefer working with BPOs and KPOs in the country due to a culture match, given the workers’ can-do attitude and positive outlook on work and in life.

6. Strong State Support

Since the BPO and KPO sectors provide great value to the economic growth of the country, the Philippine government ensures strong support to the industry. This is through a few efforts such as tax and non-tax incentives; a voucher system from the TESDA to support funding for call center training; and partnerships with colleges to create BPO-focused learning modules to prepare future BPO workers.

Two women are celebrating  success and understand the difference of bpo vs. kpo

Work with the Top BPO Firm in the Philippines

Now that you’re well aware of the top reasons you should outsource to the Philippines and the main contrasts between BPO vs KPO, it’s time for you to take time making a decision for your business needs. Whether you’ll hire BPO or KPO solutions, make sure to consider the main factors that can impact your short- and long-term goals to drive business success. After all, hiring outsourced services must help you improve the business’ bottom line and bring in the desired results for your firm.

Fortunately, the country’s leading BPO firm goes on to provide topnotch services to global clients across various sectors. And you can be one of the wise businesses that took the opportunity to work with a trusted service provider such as Outsource-Philippines. Our business process outsourcing solutions are designed to empower businesses to focus more on their core tasks while our team of experts handles the rest of their tasks and other business functions on their behalf.

Hire Outsource-Philippines’ BPO Solutions

Outsource-Philippines has almost 20 years of business experience and counting. We treat our clients as partners toward shared goals, steady growth, and business success. We don’t stop at bringing world-class services to our partners; instead, we work as reliable advisors that they can trust and maintain strong relationships with in the long run.

Sound like something you want for your firm? Contact us today to see how we can work together and get a free quote on any of our services, or just inquire to know more.