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From BPO to KPO: How the Philippines is Evolving in the Outsourcing Industry

Updated: May 8, 2023



In recent years, the global outsourcing industry has been going through a significant transformation. As businesses look for more value-added services, the traditional Business Process Outsourcing (BPO) industry is gradually shifting to Knowledge Process Outsourcing (KPO). In this blog post, we'll explore the difference between BPO and KPO, the types of accounting that constitute as BPO and KPO, and how the Philippines is shifting from BPO to KPO.


What is BPO?

Business Process Outsourcing (BPO) involves outsourcing specific business functions, such as customer service, accounting, and data entry to a third-party service provider. BPO services typically involve routine, repetitive tasks that can be easily standardized and streamlined to improve efficiency and reduce costs. BPO services are often used by businesses to reduce labor costs and to focus on their core competencies.


What is KPO?

Knowledge Process Outsourcing (KPO) involves outsourcing specialized, knowledge-based processes that require a higher level of expertise and skill, such as financial analysis, research, and technical support. KPO services are typically more strategic and value-added than BPO services and are tailored to the specific needs of individual clients. KPO services can help businesses gain a competitive edge by accessing specialized expertise and knowledge that they may not have in-house.


Types of accounting that constitute BPO and KPO

Accounting outsourcing can be classified as either BPO or KPO depending on the nature and complexity of the accounting functions being outsourced.

If the outsourced accounting functions involve routine, transactional tasks such as accounts payable, accounts receivable, and bookkeeping, then it would be considered as BPO. These are typically standard and repetitive processes that can be easily standardized and streamlined to improve efficiency and reduce costs.


However, if the outsourced accounting functions involve more complex, specialized processes such as financial analysis, tax planning, and audit support, then it would be considered as KPO. These are typically more strategic and value-added services that require a higher level of expertise and knowledge.


How is the Philippines shifting from BPO to KPO?

The Philippines has been a major player in the global BPO industry for many years, thanks to its large pool of highly skilled and English-speaking workforce, cost-effectiveness, and supportive government policies. However, the increasing commoditization of traditional BPO services and the emergence of new technologies have created a need for higher value-added services, such as data analytics, market research, and financial services.


To meet this demand, many BPO companies in the Philippines are now expanding their service offerings to include KPO services. They are investing in new technologies, recruiting specialized talent, and providing training to their existing employees to upgrade their skills and capabilities.


The Philippine government is also actively supporting this shift, by offering incentives to companies that invest in KPO and other high-value industries. The government is also providing funding for research and development, innovation, and technology adoption, to help local businesses stay competitive in the global market.


Overall, the shift from BPO to KPO is a positive development for the Philippines, as it will help the country to stay competitive in the global outsourcing market and provide higher-paying jobs for its workforce.


GFT as a KPO Provider

GFT, offers a wide range of accounting services that are part of the KPO movement. Rather than providing routine and repetitive tasks associated with traditional BPO, GFT's accounting services focus on providing clients with specialized expertise and knowledge to help them make strategic decisions. For example, GFT's financial analysis services can help clients understand their financial data and make informed decisions about investment opportunities or cost-saving measures. Additionally, GFT regularly places specialized accountants in Controllership, FP&A, Software Implementation to name a few to medium to large companies. By offering these value-added services, GFT is contributing to the shift towards KPO and helping clients achieve greater success in their financial operations.


Conclusion

BPO and KPO are two different types of outsourcing services that cater to different business needs. Accounting outsourcing can be classified as either BPO or KPO, depending on the nature and complexity of the accounting functions being outsourced. The Philippines is gradually shifting from BPO to KPO to stay competitive in the global outsourcing market and provide higher value-added services to its clients.



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