1. Industry
Send to a Friend via Email

Your suggestion is on its way!

An email with a link to:


was emailed to:

Thanks for sharing About.com with others!

Know if You're Outsourcing BPO or KPO


Not too long ago, the type of work selected for outsourcing was primarily Business Process Outsourcing (BPO). BPO work was simple and easy to document. Outsourcing programs focused on how well the outsourced team followed the documentation. The contract and performance measurements focus on rewarding precise execution. Today, more outsourcing projects focus on Knowledge Based Processing (KPO). KPO work focuses on making the correct decision, rather than correctly following instructions. KPO work is harder to outsource, requires different skills and can be less successful. It's vitally important to know the difference when you set up an outsourcing project.

Superficially, BPO and KPO are similar, since every job requires some decision making. In closely related positions, there is a spectrum of responsibility as you move from BPO to KPO. BPO functions are primarily based on instructions, work is visible to the world and the actions you take are measurable. While some functions may be complex and difficult to document, they can be documented.

On the other hand, KPO processes are often internal and not directly observable. Internal decisions can be documented, but few outsourcers know how to extract this information. Individuals performing these functions are experts in their job, but don't know how to deconstructing or document their work. Inexperienced outsourcers misinterpret an inability to explain work as resistance to outsourcing, creating a toxic relationshipthat damages the project.

To better understand the difference between BPO and KPO, let's look at some common positions in a large firm. Since most firms produce documents, we can better understand this idea if we look at positions in a document center. Here are some typical positions:

Typist: A basic position, with responsibility for straight typing. The typist needs to interpret handwriting, and decide if a misspelled word is a mistake or an intentional invention. A typist may need to follow absolute rules, such as "Every time you complete working on a document you must use the Microsoft Word spell checker." This is a BPO position.

Operator: Documents today use graphics, tables and significant formatting. An operator needs the knowledge of the typist, plus knowledge of your firm's document standards. Some standards are absolute (sales document must include the corporate logo), others are flexible (one font is preferred, but others are allowed), and still others are up to the customer (do you want page numbers, in Arabic or roman numerals, etc.)? Each individual item is simple, but together these rules affect more than the aesthetics of the finished document. They affect turnaround time, and cost. An operator must take instruction on the document, and interpret those instructions through personal knowledge about the person submitting the work (how often do you update them, which document decisions will you make on your own?. Is time or appearance more important? Learning everything you need to about the people and the culture takes a long time, and two qualified operators might make different decisions. This is usually a KPO position, but might be BPO if the center allows little customization or options in their documents.

Graphic Artist: Most people have problems describing an image. The first job of the graphic artist is to understand what the customer wants. A customer asking for, "A bird flying over a mountain," raises questions about the type of bird, if it is night or day, etc. Artist ask about the appropriate effort/cost for the project, which determines if it is better to edit an existing image or create a new graphic. This is a KPO position.

Workflow Manager: The manager doesn't work on the document, but ensures that work meets quality standards and deadlines. The manager needs to identify problematic work before a deadline is missed. Likewise, when work exceeds staff capacity the managers needs to verify deadlines and prioritize work. The manager also needs to manage customer expectations and negotiate during a crisis. This is a KPO position.

Alternatively, the Workflow manager is likely to continue to be a KPO position, even if the current decisions are simplified. Because this position is customer facing, making current customer service functions simpler and less decision based, allows more time for work on complex and unmet customer service needs.

Clearly, some positions have more decision based functions than others. Looking at the operator functions, some of the decision making that is performed today could be eliminated. If more templates were used, then operators would not need to make as many decisions or as many customer negotiations. Any "best" decision about fonts and formatting issues could become the default for future documents. "Best Practices" should be converted into defaults, simplifying the position. Process simplification needs to be part of the outsourcing process. Simplification and streamlining improves the chances that outsourcing will succeed.

Every position is a bit different. Even positions that appear to be the same, can be significantly different from one fir to the next because of the amount of decision making that is required. When you decide to outsource a position or a group, you really need to know if the function is BPO or KPO. Most outsourcing vendors are experienced in BPO, and don't have the expertise or the personnel to identify and document internal and unseen processes. Some of the position that are currently KPO, might be simplified and made into BPO positions. Simplifying BEFORE you outsource or offshore functions will significantly increase your chances of success.

©2014 About.com. All rights reserved.