What is knowledge process outsourcing (KPO)?

Whether you’re a brand-new startup or a giant corporation, there will be times when you need a little extra help. Maybe you’ve just started a big new project, and the specialists on your team need backup. Or perhaps you need innovative tech, but you don’t have the funds to invest right now. This is where Knowledge Process Outsourcing (KPO) comes in handy.

In this article, we’re going to take a closer look at what exactly a KPO is and what the benefits are (and difficulties are) when it comes to using one.

What is Knowledge Process Outsourcing (KPO)?

KPO is all about working with contractors whose main offering is knowledge — analytical or technical skills. They’re usually freelancers with deep knowledge about a specific business activity, which is part of their service. Businesses choose KPOs based on how their services will enhance their core activities.

KPOs work with companies to help them meet customer demands, provide operational efficiency, and help create customized solutions that generally improve the way the business is run. E.g., reduce design-to-market lead time, provide competitor research, or help manage rapidly evolving business scenarios.

What’s the difference between KPO and BPO?

Business Process Outsourcing (BPO) is all about creating processes. But KPO involves specialists who create custom processes depending on your needs/topics.

A KPO company will have a detailed understanding of the client’s knowledge-based requirements. This includes judgment since the role/job will involve a lot of decision-making. This is something the KPO person or team has to do with confidence.

What are the benefits of KPO?

KPO is an effective way for companies to obtain specialist help without investing in the costly process of taking on a new team of full-time staff. Here are some of the key benefits:

• Cost-saving: The outsourced company has its own experts, specialist equipment, training, and admin processes. That means your company doesn’t need to invest in these things. You simply pay for the service itself, without all the overhead.
• Better results across the business: Supporting your operations with specialist knowledge and technology means you can benefit from the very best breakthroughs and support. That includes core functions or other non-core areas, like data collection, analytics, accounting, and so on. The result? Better products and processes, bigger profits, and happier customers.
• Improved efficiency: Because the outsourced company is full of specialists, they’ll be able to handle your needs more efficiently and with greater accuracy.
• Access to cutting-edge practices and tech: New technology can be expensive. When you outsource it, you have access to the latest innovations without paying for the entire solution upfront. Ultimately, this allows you to keep pace for a fraction of the cost.
• Lower risk: Risk is low because the cost of outsourcing is typically lower than the in-house option, and you only use the service for one project.

When should you use a KPO?

There is a range of reasons that might lead a business to choose KPO. But, generally, they fall under three categories:

• A lack of specialization: The task requires expert knowledge that you just don’t have. Or the task is too big for the specialists you have to handle on their own — so you bring in more help.
• A lack of resources: Your operations would benefit from innovative tech, processes, or simply more personnel that you can’t afford outright, so you outsource.
• A lack of employees: Whether your team lacks specific skills or is currently overburdened — KPO could be a financially smart option.

Who should use a KPO?

KPO encompasses a wide range of services. Here are some of the more popular types of KPO:

Data, search, and analytics

KPOs provide advanced data analytics services — including supply chain analysis, customer analysis, and retail analysis — for a range of industries. The goal is to help companies understand their issues and develop effective solutions. These could do with their products and services, competition, or any other relevant market information.

Engineering design

Engineering Design Outsourcing (EGO) is all about outsourcing anything engineering-based to external companies or experts. This could range from design to production and maintenance. The work usually involves advanced engineering methods or tools.

Remote education and publishing

Publishing houses, governments, and educational institutions often outsource education materials and publishing to save on costs.

Market research

Market research is a very data-heavy process. KPO vendors will often use large-scale surveying, analytics, and statistical tools to compile information into a report for the client.

Banking, security, and insurance

Investment research will involve valuations, financial modeling, stock tracking, company analysis, and more. KPOs can help with all of this.

Software development

B2B software firms often need KPOs to help with streamlining their development process to speed up time-to-delivery and boost profits without letting quality drop.

Healthcare

Hospitals and clinics need help with complex data and invoicing systems and often outsource this to KPOs.

Creative and content marketing

Marketing agencies rely on large amounts of audience data to inform their advertising and creative work. KPOs can do the data collection, analysis, and monitoring side of things.

This isn’t an exhaustive list — but what companies that do use KPOs have in common is that they tend to work with large amounts of data.

What are the challenges of working with a KPO?

As will all industries and services, working with a KPO isn’t without its fair share of challenges.

Security and compliance are big challenges — and it’s something that will always be the case when you involve third-party companies. This is why it’s important to take extra precautions when working with vendors, to make sure nothing is lost or stolen. Ask your KPO company about their security measures to make sure they align with your own standards or higher.

Alignment is another challenge. Just because a KPO offers the services you need, it doesn’t mean they’ll be the right fit for your company. Running a chemistry meeting before you hire a KPO can help you get to know how they operate and whether their workers will get on with your team.

With all this in mind, vendor managers should make sure they’ve thoroughly researched the reputations of their prospective KPOs and look for established brands to partner with.

Who manages KPO?

Normally, this is the job of the project manager, management consultant, or vendor manager. Their biggest challenges include finding the best talent, onboarding it, and aligning it with internal teams. Communication and strong alignment are a must — and project management tools can be a great way to get everyone on the same page.

With Backlog, our own project management tool, you can set permissions to allow third parties access to schedules, time tracking sheets, and workflows — meaning everyone is working from the same data at the same time. It also means team members can log in and see what contractors are doing in real time without worrying about missing information.

When you’re all working on a big project with internal and external teams, collaboration is a must, and collaborative project management software is the golden thread that ties it all together.