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KPO Business Model: The Best Approaches in Achieving Business Success

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Introducing new products and services has become more challenging for global corporations due to the more competitive market. Thus, businesses need to explore different cost-effective strategies while striving to improve business functions. This is where knowledge process outsourcing (KPO) can help you reach your company’s KPIs.

The KPO improves the operational efficiency and strategic value of businesses’ products and services. If you’re not familiar with KPO business models, this post will explain what KPO is and the effective approaches your business can use.

Definition of Knowledge Process Outsourcing

Industry leaders build credibility by creating and disseminating knowledge-based information. Businesses acquire information by contracting critical tasks out, prompting owners to hire the services of outsourcing firms.

KPO business model is the practice of offshoring vital business functions such as data gathering, market research, consultancy, and digital marketing, among others. These tasks are delegated to professionals who possess advanced degrees and relevant expertise to fill the process gaps of the operation. KPO deals with completing information-driven activities, allowing businesses to increase their market value.

This business solution is beneficial for companies in making critical decisions, product development, and other innovations. Although equally important for business growth, business process outsourcing (BPO) focuses on following processes, while KPO involves performing more complex and analytical work. Businesses look for knowledge-intensive outsourcing firms to obtain high-quality information and a highly specialized workforce at a reasonable cost.

The Emergence of the KPO Industry

The success of the BPO paved the way for KPO to become one of the most in-demand industries around the globe. Both corporate giants and start-ups turn to third-party vendors to obtain useful insights that will help owners and executives have a strategic decision-making process. It’s also a wise move to hand off different roles to experts.

The KPO industry has played a huge role in research and development, data analytics, information security, and fund management of companies over the years. Not only businesses can benefit from this lucrative industry, but as well as the professionals who want to offer domain expertise.

What is KPO Business Model?

As mentioned earlier, BPO is known for consolidating the backend functions of an organization. Aside from that, core business functions are also being outsourced as one of the most effective cost-cutting measures while acquiring specialized knowledge.

In KPO, a large number of information-related activities are outsourced to third-party service providers. The KPO business model enables companies to access quality service from highly skilled professionals. Hence, achieving the optimum allocation of resources in the process becomes easier and more efficient. 

This model offers complete solutions to enterprises, covering both simple and complex processes. The portfolio and depth of expertise of KPO providers are also enhanced when they form solid partnerships with companies.

If you want to try this approach, there are several factors involved in the selection of a business model. This includes start-up cost, project complexity, competency level, and the nature of business. Here are the three prominent KPO business models in which outsourcing firms operate.

Icons showing KPO business model

1. Captive Center

Captive centers are often client-owned, so professionals are full-time employees of the client. They’re often not handled by a vendor manager. Moreover, such firms may be located within a local region or overseas. This is designed to provide resources directly to the organization that manages it.

This KPO business model solely focuses on the requirements of the direct company and doesn’t accept work from other clients. Since the capital investment in setting up captive centers is expensive, only multinational companies can afford it in a location where talent availability is high. Some companies with this model include Morgan Stanley, McKinsey, JP Morgan, and Deutsche Bank.

2. Third-Party Service Providers

One of the main benefits of third-party service providers is that operations and requirements can be customized for clients. Services are more flexible, allowing businesses to ramp up operations if necessary. Clients put more emphasis on data confidentiality or intellectual property protection. This is because they involve the collection and processing of private information.

3. Virtual-Captive (Hybrid Business Model)

The virtual-captive outsourcing business model offers both flexibility and functionality, which has become attractive in the digital business world. In this hybrid setup, third-party vendors directly manage the talents, operations, and infrastructure, but the client has direct control over the entire business operations.

Additionally, it offers a work environment that is closer to what the client wants, but the outsourcing firm is still held accountable for maintenance. A virtual captive is considered a low-risk investment in terms of infrastructure while maintaining transparency in both expenditure and operations.

When Should You Use a KPO?

Both start-up and established businesses need some extra help in operations at some point. Aside from that, KPO services help boost your way to achieving your business goals. If you’re still in doubt, here are some of the most common reasons for outsourcing your organization’s functions.

1. Lack of Expert Staff

KPO provides the solution for tasks that require expert knowledge. In case you have a specialist onboard but can’t handle the volume of work, service providers may come in handy. You may seek help from KPO companies if you aren’t equipped to handle the job yourself. They also specialize in one or more areas. For example, a virtual assistant can be a content creator or social media manager.

2. Shortage of In-House Employees

KPO effectively solves any shortage of skilled professionals within an organization. Plus, hiring the services of KPO firms is a good way to address tasks with efficiency.

3. Scarcity of Funds

If you need to implement a cost-cutting strategy or divert resources to other areas of your business, KPO can offer affordable business solutions. Your business can get innovative technology, relevant data, and technical skills at a lower price.

4. In Need for Expansion

KPO can provide professional assistance when you plan to expand your business, especially if you’ll introduce a new product or service to the market. It provides additional human resources to acquire the relevant data you need for expansion.

Knowledge Process Outsourcing in the Philippines

The Philippines is recognized as one of the best outsourcing hubs. Filipinos are known for having well-rounded personalities and excellent communication skills, overcoming culture and language barriers. The country also remains competitive because of high talent availability paired with moderately lower costs. 

The future of the  is definitely promising. The government agencies and private sectors work together to further strengthen KPO practices in the country. They continue to provide skills training under the supervision of the Department of Trade and Industry (DTI) and the Department of Information, Communication, and Technology (DICT) to train Filipinos in jobs related to this field.

KPO firms can provide a wide range of essential information-centered services such as market research, design, data management, and content creation. From 2022 to the following years, the industry is expected to grow further, thanks largely to the continuous digital transformation and progressive consumer trends.

Outsourcing team discussing tasks at the office

Outsource-Philippines’ Approach to KPO

We at Outsource Philippines are committed to helping clients achieve their business goals through quality BPO and KPO services. Clients are granted full access to a pool of skilled and efficient workers ready to showcase their expertise. Moreover, we have a custom recruitment process based on the unique needs of each project. Apart from that, we thrive in the industry because of our approach to providing quality services.

Dedicated Office-Based Teams

What makes us highly competitive is our dedicated office where we monitor the performance of each employee. Not just that, team members also go through thorough monitoring every three months to ensure on-time product delivery and consistent work performance. Managers provide employees with valuable training and coaching to further hone their current craft. Doing this assures our clients that we only offer the best services.

Quality Assurance Monitoring

We understand the importance of effective KPO services. Hence, we conduct regular quality assurance monitoring to ensure full compliance with the company’s standards. Managing production from creation to delivery is an indispensable part of the company’s quality assurance process.

Furthermore, we believe that an organization can build a positive reputation for reliability. This is when we’re consistent in maintaining the quality of the outsourcing services. Quality assurance can help a lot in building clients’ trust and confidence, encouraging them to work again on future projects.

Today’s global enterprises seek the services of outsourcing companies to support their core business functions. The KPO business model covers a wide range of activities depending on the actual needs, industry, and business focus of a company. If you’re an investor or business person planning to penetrate the competitive market , hiring third-party service providers is an efficient way to do this.

Outsourcing team from the Philippines celebrating for KPO success

Work with the Best: Choose Outsource-Philippines to Manage your Core Functions

Not all KPO companies deliver the same, so only work with a KPO firm with a proven track record. If you’re in need of quality outsourcing services, look no further! Outsource Philippines offers a comprehensive range of KPO services for all types of businesses here and abroad.

Our account specialists and project managers can meet your business needs and monitor progress of your project from start to finish to ensure complete client satisfaction. In addition, with our dedicated professionals who are experts in different industries, you can expect first-rate business solutions. What are you waiting for? Contact one of our KPO specialists today and allow us to manage your core business functions with efficiency and great speed.