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Difference Between BPO and KPO - Head to Head Comparison

Updated Jan 09, 2020

In the current business scenario, it is common to see peripheral as well as routine business processes being outsourced. Third-party service providers are coming forward with technology-backed solutions for various operations. Third-party outsourcing companies are equipped with the best personnel and equipment to take care of all kinds of business processes spanning different industries.

A Knowledge Process Outsourcing (KPO) unit is derived from a BPO and is its subsegment. If you are still wondering ‘why BPO?’ then do know that it takes care of knowledge related work that is adeptly handled by best outsourcing agents. This article will help you learn more about what BPO means, what KPO means, types of BPO, types of KPO, the fine details in the differences between a BPO and KPO, etc.


The services provided by a BPO includes customer care, telemarketing, technical support with the help of voice processes, sales, etc. A KPO offers in-depth knowledge, analysis and expertise about complex subject areas. They are capable of helping out organisations belonging to different knowledge verticals. The range of services includes legal services, market and business research, etc.
The full form of BPO is Business Processing Outsourcing. The full form of KPO is Knowledge Processing Outsourcing.
The employees recruited by BPO companies need basic computer knowledge and practical communication skills. The employees recruited by KPO companies need specialised knowledge of various subjects. They should be equipped to take care of the knowledge-based needs of their clients.
BPOs provide low-end services. KPOs are hired to take care of the high-end services of their clients.
BPOs deal with pre-defined processes as determined by their clients. A KPO company needs to understand the client’s business in-depth. It should be able to apply that understanding to handle the knowledge-based requirements of clients.
Employees generally do not possess high educational qualifications. KPO companies hire the expertise and skills of knowledgeable employees with high educational qualifications only.
A BPO unit offers its expertise in the fields of process application and function management. KPO units provide services in the knowledge domains to their clients.
BPO relies on cost arbitrage. KPO relies on knowledge arbitrage.
BPO companies are driven by volume. BPO companies are driven by knowledge.
BPO works based on rules. KPO works based on insights.
BPOs handle a low degree of complexities. A KPO manages higher degrees of complexities.
A BPO provides lower levels of collaboration and coordination services. A KPO provides higher levels of collaboration and coordination services.

What is BPO?

In its purest form, the BPO definition explains that Business Process Outsourcing pertains to the outsourcing of specific functions, segments and processes of business organizations to third party organisations. BPO is very important for reducing costs and maximising efficiency. These are the primary reasons behind big and small organizations hiring the expertise of BPO organizations. BPOs are instrumental in bringing consistency and productivity to the pre-determined processes assigned to them by their clients.

Types of BPO Companies

1. On-shore BPO: This type of BPO company takes care of outsourced business processes belonging to a company in the same country.

2. Nearshore BPO: In this case, the business activities of a specific company are outsourced to a BPO unit situated in the nearby region.

3. Offshore BPO: The business activities of a domestic company are outsourced to a BPO company located overseas in case an Offshore BPO is hired.

Services Offered by a BPO

BPO units are capable of the pre-determined back-end and front-end processes of any business entity. The basket of services provided by them include:

  • Help desks, call centres, etc. about customer care
  • HR services like training and placement, recruitment and selection, payroll processing, etc.
  • Finance and accounting-based services
  • Technical support
  • Web hosting and other website-based services
  • Medical transcription, etc.

What is KPO?

The Knowledge Process Outsourcing or KPO definition explains it as the transferor assigning of information plus knowledge related processes/ functions to a third-party organization. The KPO is usually an entity that is different from the leading company. It may also be a subsidiary of the organization that is located in a different or same country for the sake of minimizing costs.

KPO companies are known to carry out different high-level tasks with the help of highly skilled personnel. A KPO can be regarded as a more advanced version of a BPO. Along with major knowledge-based decisions, the lower-level decisions are also capable of being taken by KPOs. The workers employed by a KPO possess domain expertise, in-depth knowledge, useful interpretation and judgment powers, and a lot more, for taking care of specific knowledge issues.

Why KPO?

The large basket of services on offer by KPO includes:

  • Market research services
  • Investment research services
  • Business research services
  • Data analytics
  • Financial Process Outsourcing
  • Legal Process Outsourcing
  • Media Process Outsourcing, etc.


Most organisations are outsourcing their day-to-day/ peripheral processes to lay more focus on their core activities. They are hiring the expertise and skills of BPO and KPO employees to use their in-house resources more effectively. Over time, KPOs and BPOs are found rubbing shoulders in terms of their usage and importance for domestic and overseas companies. If you look around carefully, you will even find third-party organizations providing the services of a KPO and BPO simultaneously.

Here, we have explained the features, functions and differences of a BPO and KPO in details. In case you have any further inputs, do write to us in the comments section below. We shall wait to hear from you!