KPO - Knowledge Process Outsourcing
KPO - Knowledge Process Outsourcing is the next step after business process outsourcing. It is a progression that moves the process into more critical and skilled functions. Where BPO generally requires less education and little decision-making tasks, KPO expects employees to make knowledgeable and informed decisions regarding certain pieces of data. Rather than solely understanding and implementing the process, employees involved in KPO require higher levels of skills or experience in order to come to conclusions about relevant data.
To understand the difference between BPO and KPO, let us examine the health insurance industry. The insurer generally has two departments, one that enters the data from potential applicants and existing applicants, and another division that reviews and approves or declines all applications. For employees who are part of the department or third party company that oversees business process outsourcing, little is required in the way of skills, other than being able to enter the data accurately and quickly. Once they learn how to use the associated programs, they need very little else to complete their tasks. On the other hand, employees involved in KPO - knowledge process outsourcing, they must have a firm understanding of the health insurer's policies, the processes by which applicants are approved or denied, and how to analyze specific information provided by applicants. Being able to make a screening decision on the applicants requires more education, and a different type of employee and service than BPO. Further, the offshore vendor can be held accountable for decisions that are made that are contrary to the company's stated methods.
Another example of KPO - knowledge process outsourcing, which actually has become very popular in recent years, is using offshore companies and freelancers for legal outsourcing. Often, the paperwork for various tasks such as registering trademarks, copyrights, and proprietary systems is long and cumbersome. Companies have found that it is more efficient for them to offshore outsource the compilation of documents, and any other material needed for applying for the registrations. Likewise, legal researching such as patent research is a function that can be performed elsewhere, but one that requires a specific education and skill set. A data entry clerk, for example, would not be trained or experienced in conducting legal research.
Through the years, India has been the clear leader in knowledge process outsourcing. But recently, the Philippines have stepped up to the plate, and they are becoming more known for their abilities to get the job done and adapt to foreign companies. In fact, Filipinos view the whole process as a privilege to work for an overseas company. Wages are generally higher, and working conditions are better.
Interestingly, although costs are still a major factor driving the KPO - knowledge process outsourcing industry, where once companies did not want to be tied down by added employees and capital expenditures, today, many companies are buying out third party vendors. The KPO units have become revenue generators, and thus, are attractive to companies. This was not the case when they had they own in-house departments. It is much more acceptable to own third party vendors whose employees produce and earn their keep, than try to become a viable outsourcer in home countries with local staff who have traditionally been cost burdens.