ITO, BPO, KPO: What’s the difference?
Business process outsourcing—or BPO—is the outsourcing of a specific business process task, such as payroll. It's often divided into two categories: back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support. Information technology outsourcing (ITO), therefore, is a subset of business process outsourcing.
While most business process outsourcing involves executing standardized processes for a company, knowledge process outsourcing —or KPO—involves processes that demand advanced research and analytical, technical and decision-making skills. Less mature than the BPO industry, sample KPO work includes pharmaceutical research and development, data mining, and patent research. The KPO industry is just beginning to gain acceptance in corporate America.
IT outsourcing clearly falls under the domain of the CIO. But often CIOs will be asked to be involved—or even oversee—non-IT-related business process and knowledge process outsourcing efforts. CIOs are tapped not only because they often have developed skill in outsourcing, but also because business and knowledge process work being outsourced often goes hand in hand with IT systems and support.
What about cloud computing? Is that outsourcing?
Unlike traditional outsourcing, which one tends to associate with multi-year contracts based on developing and maintaining custom code and running on the backs of legions of programmers and on-site systems integration work, cloud-based offerings serve ups IT services (server, networks, applications) via the Internet. Instead of handing, say, customer application development or internal infrastructure support to an outsourcer, customers access "the cloud" for infrastructure services or multi-tenantsoftware-as-a-service on a pay-per-use basis.
Since cloud computing customers are technically relying on...