What is the role of KPO in business? (Best practices, FAQs)

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Knowledge Process Outsourcing (KPO) means hiring a third-party vendor to work on a company’s information-related business activities. It involves contracting tasks, like research, legal services, tax calculation, etc., to skilled experts in that particular field.

However, a business owner considering knowledge process outsourcing needs to clearly understand the role it will play in their success. This can help them identify the tasks they need to outsource and find the right KPO partner.

In this article, we’ll explore the role of KPO. We’ll also discuss the five best practices for implementing knowledge process outsourcing and answer a few FAQs regarding it.

Table of Contents

Let’s get started.

Role of KPO in your business success: 8 key services

Let’s look at the role of a KPO company in helping a business achieve success:

1. Simplifies data analytics

By outsourcing data analytics, companies don’t have to spend time on complex tasks and can derive actionable insights to help with decision-making and developing better business plans. 

Here are some commonly outsourced data analytics tasks:

• Data management.
• Data processing.
• Data mining and other services.

KPO companies apply these advanced data analytics services for supply chain management, customer relationship management, retail sales, and various other industries.

2. Offers efficient engineering design

Outsourcing engineering design can reduce product life cycles and decrease the time required to reach the market. 

Here are a few engineering design outsourcing services:

• Product design.
• 3D models.
• Prototyping and testing.
• Mechanical drawing, and more.

Companies in the manufacturing, design consulting, biomedical, and other industries acquire engineering design KPO services.

3. Creates relevant informative content

A KPO firm with expertise in a particular field can develop educational content and help publish it. These companies can:

• Identify relevant information from lengthy content.
• Complete labor-intensive processes like publishing.
• Utilize advanced technology like Artificial Intelligence (AI) for writing content.

Usually, educational institutions outsource content creation, publishing, security, etc.

4. Facilitates market research (Business research)

A KPO firm usually has better access to a country’s market to study the viability of a new service or product. It allows the business to understand the target market and collect opinions and feedback from potential customers on the product or service.

Here are some outsourced market research tasks:

• Conducting polls and surveys.
• Generating infographics.
• Creating white papers. 

5. Streamlines financial services

A KPO organization offering financial services can save you the hassles of getting involved in complex financial tasks. By outsourcing these tasks, you can save your time and money since KPO companies have the latest financial tools, which would otherwise cost you a huge amount. 

Financial KPO services include:

• Investment research.
• Financial modeling.
• Equity research, etc. 

Institutions like banks,insurance companies, and other businesses involved in monetary services highly benefit from this KPO. 

6. Provides professional healthcare-related services

Healthcare KPO companies employ the most skilled medical professionals, like doctors, to ensure the quality of their services. They also train their employees strenuously during the onboarding process to increase their domain knowledge and offer solutions to unexpected problems. 

Popular medical services offered by a KPO include:

• Examination of patient’s medical test results.
• Conducting research and development.
• Managing medical billing and underwriting.

Hospitals, clinics, and other healthcare institutions usually outsource these services.

7. Gives expert management consulting services

Outsourcing management consultancy can give you a fresh aspect of an issue due to their extensive experience in a particular field. The KPO firm also employs experts who can analyze market trends and predict business growth. 

Management consulting services include:

• Professional advice and guidance.
• Actionable solutions for businesses experiencing issues. 
• Designing budgetary and control systems.
• Developing management information system.

8. Simplifies legal services

A KPO company that specializes in legal services can help law firms quickly scale up to meet the requirements of a particular case. They also provide the latest technologies and skilled professionals specialized in a niche.

Here are some outsourced legal services:

• Legal research.
• E-discovery.
• Case management.
• Intellectual property research.

Let’s understand how outsourcing knowledge processes can be beneficial.

How do you benefit from outsourcing knowledge processes?

Here are the benefits of outsourcing knowledge processes:

• Cost-effective: Hiring an offshore KPO company can be more cost-saving than employing a full-time KPO team due to low labor costs, real-estate rent, and utility bills in popular outsourcing destinations. 

• Concentrate on urgent tasks: By opting for KPO, you can save the time your skilled workers would otherwise spend on repetitive and time-consuming tasks. You can invest this extra time in urgent business functions, like scaling, and core competencies, like product development.

• Easier onboarding: Recruiting a skilled employee is more challenging and tedious when compared to hiring a KPO provider. You don’t have to worry about training, attendance management, or other Human Resource (HR) hassles.

• Access to a skilled employee: An in-house team may have only limited skills as they don’t work with several clients. On the other hand, a KPO company may have more expertise in the field due to its exposure to multiple clients. Their employees have advanced education in specific fields.

• More working hours: Your KPO partner may have a different time zone and working hours. As a result, they can take up tasks during your in-house team’s non-working hours. This way, your business can stay live and running 24/7. 

• Use of advanced technology: Your in-house team may not have the latest tool to perform a repetitive annual task. On the other hand, a knowledge process outsourcing company may have advanced tools as they specialize in specific fields and have multiple clients with similar task requirements. 

For example, an Information Technology (IT) company may not spend money on a customer experience (CX) tool due to budget constraints. But by outsourcing CX management to a KPO firm, they can access the latest advanced tools without spending on them.

Now, let’s look at the different methods for executing knowledge process outsourcing.

6 best practices for implementing knowledge process outsourcing

Outsourcing high-end, knowledge-specific tasks can optimize a business process and increase profitability. But knowledge process outsourcing can be unsuccessful if not done carefully. 

Here are the six best practices for implementing a KPO process:

1. Determine why you need to outsource knowledge process

You can confirm whether you need to outsource the knowledge process by assessing:

• If you can meet your business goals with your current performance.
• If you have the capacity to make a change in the organization without external agency.
• Whether your team will benefit by outsourcing tasks. 

You should ensure that you’re not outsourcing a goal that’s well within your reach. 

For example, you don’t have to outsource if your in-house workload is temporarily high due to an employee’s absence. Instead, distribute the workload among other in-house team members if they’re willing to take extra work. 

But if they’re not willing to put in extra hours, you can outsource time-consuming tasks.

2. Decide on the tasks to outsource

Outsourcing the right knowledge process is essential to experience its benefits. If you outsource the wrong task, you may not be able to save money and time or share its other merits.

For example, if your intention to outsource is to save money, you can achieve it by outsourcing automation or customer service, which requires high-end tools. 

On the other hand, if you’re outsourcing to save time, delegate time-consuming tasks like data analysis or mining.

You can outsource the right tasks by asking questions like:

• Where is the business losing the most resources? 
• Why is the team struggling to meet goals? 
• Where do I see the most opportunities for future growth?

With these answers, you can narrow down the list of knowledge processes to outsource. 

You can start outsourcing smaller tasks so that you understand the do’s and dont’s of the process better. It will also help you determine if the KPO provider is the right partner for you.

3. Identify the right KPO companies

One of the most important steps for successfully outsourcing knowledge processes is choosing a suitable partner from the KPO industry.

The key points to consider while choosing a knowledge process outsourcing company is:

• Expertise offered: The KPO company needs to have the required expertise and specialized knowledge in your field or industry to provide quality services. 

• Operational frameworks: Since knowledge process outsourcing includes confidential information, the KPO company needs a regulatory board to oversee its business operations and ensure quality. You also need to ensure that the company’s data security and privacy policies align with yours. 

• History and reputation: Ensure the knowledge process outsourcing company is a key player with experience in your industry. They should’ve worked with several clients from your field and have had great client reviews.

• Costs and contractual terms: Choose an outsourcing company that’s within your budget. Also, look for KPO companies whose contractual terms match your long term plans and values.

4. Develop an outsourcing agreement

Before you begin the outsourced operations, create an outsourcing agreement to guide the KPO and ensure a smooth partnership.

You should define:

• Terms for data governance and risk management.
• Schedules, channels, and other information for cross-team communications.

An outsourcing agreement can help you hold them accountable for their services, including quality and timeliness.

Know the 15 key points to include in your outsourcing agreement.

5. Employ continuous change management

You need to account for the changes after you outsource a knowledge process and prepare your in-house team to ensure a smooth transition.

You need to keep your employees informed about changes:

• In the agreement, meeting schedule, etc.
• In procedures and the reason for the change.

6. Use productivity management tools

Managing a knowledge process outsourcing company can be difficult since they’re most likely located in a different country. You may not be able to ensure that the KPO professional will work productively.

To tackle this, you can use time tracking tools like Time Doctor, which offers an interactive and silent time tracker for logging work hours in real-time. It also records the task the KPO employee is working on during billable hours.

Additionally, Time Doctor offers payroll management features that integrate with popular payment gateways such as Gusto, ADP, Paypal, and Wise. It also helps you pay the KPO company based on payment methods, periods, currencies, and rates.

Now that you know how to implement knowledge process outsourcing, let’s look at a few frequently asked questions. 

5 key FAQs about KPO

Here are a few frequently asked questions about knowledge process outsourcing:

1. What is the difference between a KPO and BPO service?

Business process outsourcing or BPO is outsourcing a non-core task.

BPO services include data entry, unskilled call center service, back-office tasks, etc. On the other hand, KPO service involves technical service, data processing, and other services.

An employee in the BPO industry mainly requires communication skills, while those in the KPO sector require technical expertise and experience.

Most importantly, the KPO is a subset of BPO, like Research Process Outsourcing (RPO) and Legal Process Outsourcing (LPO). 

2. What are the types of KPO?

There are four types of knowledge process outsourcing depending on the location of the company:

• Nearshore KPO: Hiring a KPO vendor from a neighboring country. For example, a UK-based startup partnering with a Belgian KPO company.

• Offshore KPO: Hiring a KPO company from a far away country. For example, a US-based company outsourcing knowledge processes to a KPO firm in India.

• Onshore KPO: Hiring a KPO company within the country. For example, a Swiss company outsourcing its knowledge process to a Swiss KPO firm.

• Captive KPO: A company that has set up an office in a foreign country to carry out a particular knowledge service. For example, a company with their technical customer support office in the Philippines.

3. When do you need KPO?

You need a KPO service provider when:

• Your employees lack specialization: You may have to consider knowledge process outsourcing when your in-house team doesn’t have the know-how to handle a particular information-specific task. For example, you can outsource customer service like technical support if your in-house team isn’t adept in it.

• You have a shortage of employees: When an information-specific task requires more employees than your in-house team, you can outsource the task to a KPO company. This is a great solution when there is a temporary spike in workload, and you need extra assistance only for a project or two.

• There’s a lack of resources: You can outsource a knowledge process due to the lack of time, tools, or other resources. Let’s say you need to use tax software once a year to calculate income tax. Instead of purchasing the tool, you can outsource the business activity to a knowledge process outsourcing company.

4. Which are the leading KPO countries?

Here are the most popular the knowledge process outsourcing countries:

Check out the 30 insightful outsourcing articles you’ll want to bookmark.

5. Which are the popular KPO industries?

Here’s a look at some popular industries outsourcing knowledge processes:

• Finance
• Law
• Engineering
• Medicine
• Technology
• Customer care

Wrapping up

The role of a KPO company in a business’s success is mainly by taking over complex, time-consuming core tasks and completing them with high precision and skill. KPO service providers can take full responsibility for tedious but important tasks like research, designing, data management, and more.

Some other advantages of KPO companies include reduced operational costs, access to better talent, etc. 

However, you need to implement the best practices of knowledge process outsourcing to ensure the process is efficient and beneficial. 

You can use this guide to reap the maximum benefits of KPO.