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KPO and BPO - short intro

There are few major differences between a Knowledge process outsourcing and business process outsourcing

The BPO space took off to reach several lacs of outsourced jobs in a short time but the similar numbers are not visible in KPO space even though underlying dynamics are similar. This exemplifies KPO is an altogether different breed, even though they are children of same mother.

BPO space triggered the first success by leveraging the improved communication techniques by using off-shoring and cost advantages. One of the first processes/ activities outsourced were the non-critical activities which do not carry business or reputation risks.

For KPO though the fundamental cost arbitrage remains crucial but there are other factors like access to talent which are also key drivers for the business acceptances.

KPO activities are designed to help the management of the company to grow bigger and stronger. The ultimate goal of KPO is to increase the profitability of the company. BPO activities are more inclined to managing the business & customer smoothly and efficiently.

KPO's objective is to enhance the shareholder and stakeholder wealth by helping make better informed decisions. BPO activities do not have direct impact on decision making and usually is the first level of non-critical work. KPO activities can include critical work and there are less likely to be outsourced until the conviction sets in. Therefore, KPO takes a longer time to turnaround into a deal than a BPO. BPO activities are critical mainly in the sense of information security and quality maintenance. BPO takes a relatively less time to turn into a deal as they are not business critical.

The rewards in KPO are non-linear, for both the client and vendor, i.e. benefits acquired are exponential to the input costs. On the other hand, BPO's rewards are not elastic as KPO's as they are mainly man-power dependent. Innovation is a major area of KPO work, as the criticality of the process increases vendors also have to constantly innovate the processes to align with new developments.

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