Difference Between BPO vs KPO vs RPO and Recommendations
Businesses need more staff, space, and resources as they start to grow. They want to maximize their profit without spending too much. This is where outsourcing came into the picture.
Businesses can now accomplish critical tasks without investing in hiring and training new staff or purchasing new equipment by outsourcing.
There are different types of outsourcing. With the increasing demand for outsourcing services, BPO, KPO, and RPO became famous. To find the most suitable type of outsourcing for your business, you have to understand the difference between BPO, KPO, and RPO.
This article will discuss the differences between these services so you may know them better. Once you’re done reading this, you’ll be able to decide which type of BPO services will benefit you the most.
What is BPO
BPO (Business process outsourcing) is the most commonly used term here out of three. When hired, these are essentially third-party services that execute a specific business process for their clients.
For example, let’s say you have a manufacturing plant but need a marketing team to help promote your products. In this case, you can either get an in-house marketing team, which will be an expensive process. Or you can outsource a marketing campaign from a business service provider, which will be much cheaper.
There are different kinds of BPO services out there. No matter what your business demands, chances are that you’ll be able to find a suitable BPO service to satisfy that.
What is KPO?
KPO stands for Knowledge Process outsourcing. KPO business providers sell data, knowledge, and skills. It’s a lot like BPO, as it also gets business processes done. However, it’s different in that while BPO handles easy or no-brainer tasks, KPO is responsible for handling tasks requiring extensive knowledge and skill.
So, if you want to get high-quality work done, you can hire a KPO service provider. That being said, KPO services usually come at a very high price. Also, it has greater risks associated with it. Firstly, KPO services handle tasks that require extensive data from the company. Trusting a third-party firm with sensitive data may not be a good idea.
Then again, there’s no guarantee that a firm will work with you permanently. Shifting crucial tasks from one KPO firm to another won’t be very easy either.
So, a business shouldn’t opt for KPO firms unless it fails to form an in-house team of experienced staff.
What is RPO?
RPO is a branch BPO, which stands for recruitment process outsourcing. A business may hire an RPO firm when it’s recruiting new employees. So, how do RPOs help?
Well, these firms consist of experienced and skilled human resources management staff who can sort and select the best candidates who apply for a position at your company. These are highly effective as they can reduce a lot of pressure off of your in-house human resources department.
RPOs can ensure quality recruitment staff. Not only that, but you can also hire RPO firms in two ways. You can either hire them for the long term, or you can hire them on-demand. If your business hires employees only a handful of times a year, then you’ll benefit greatly from hiring RPO services on-demand. These will help you reduce your expenses by a great deal as you won’t have to pay for idle employees.
The Difference Between BPO, KPO, and RPO
We’ve learned what BPO, KPO, and RPO are thus far. Now, it’s time to take a look at their core differences.
Let’s start with BPO. BPO can be considered the primary layer. While the term BPO is mostly used to refer to business processes that require less knowledge and skill, it can be used to refer to any business process.
The specialization starts from KPO. This term can only be used to refer to business processes that require extensive knowledge and skill. So, KPO firms are specialized in the way that they only work on a higher level of work, such as market research, medical transcription, data analysis, etc.
Finally, we have RPO. RPO too is a specialization and a subclass of BPO. RPOs help businesses hire qualified employees. Unlike KPO or BPO, which spans a range of activities, RPOs focus on human resources management and recruitment.
Which One is The Best?
Now that you know the difference between BPO, KPO, and RPO. It’s time to decide which type of service your business will opt for. Here are some factors you must consider to choose the best alternative for yourself.
What Does Your Business Require?
You have to know your business thoroughly before deciding to outsource. You need to understand the capabilities of your staff and the restraints of your business. Doing so will help you understand what your business needs most at a given point and how you should allocate the funds.
Let’s say your business needs a research team and can also benefit from a call center. Knowing your business properly will help you understand which one you will need more.
How Can You Allocate the Funds?
Different outsourcing companies charge you differently. So, knowing how much funds you can allocate to solve a specific problem is necessary. Various BPO firms don’t charge much. However, KPOs used to charge a ton. RPOs also charge a significant sum, but they are a must if you don’t have a recruitment board in place.
So, it’s necessary to know how much resources you can spend. Also, knowing your constraints will help you plan better. Let’s say you require the help of a BPO firm for a 24/7 call center, a KPO firm for conducting thorough market research, and an RPO for recruiting employees once a year.
Now, you have an idea of your funds and know that you can’t afford all three at once. However, if you hire the BPO firm full-time and the KPO and RPO firms on-demand, you will be able to use the available funds to afford all three.
What is Your Business Capable Of?
Just because you can doesn’t mean you have to outsource business processes. It’s always a good practice to have an in-house team. You'll be well off if the team is experienced and skilled enough to get the job done.
So, it’s important to consider whether you should have an in-house team or outsource a process. Usually, we recommend having an in-house team for processes that you’ll have for the long run, will be affordable, and when it’s possible to train employees properly.
At the end of the day, it doesn’t matter whether you settle for a KPO or a BPO service provider. It all comes down to whether you can make the most out of the firm or not.
Still, if we had to choose, we would recommend going for BPO companies and forming in-house teams to complete the advanced processes. These require advanced company data, so it’s better if that information isn’t shared with third-party companies.