Outsourcing involves transferring an entire business function or process to an external service provider through a contractual agreement. There are two broad categories of outsourcing: business process outsourcing (BPO) and knowledge process outsourcing (KPO). BPO involves outsourcing standardized tasks like payroll or customer support. KPO requires higher-skilled work like research, analytics, or content creation that involves more decision making. Common BPO services include call centers, marketing, and web development, while KPO includes pharmaceutical R&D, legal services, and data analysis.

1. OUTSOURCING
Outsourcing involves the transfer of the management and/or
day-to day execution of an entire business function to an
external service provider .The client organization and the
supplier enter into a contractual agreement that defines
the transferred services.
under the agreement the
supplier acquires the means of production in the form of
transfer of a people , assets and other resources from the
client .the client agrees to procure the services from the
supplier for the term of the contact.

2. TYPES OF OUTSOURCING
Outsourcing can be divided into two broad categories. They are
BPO and KPO. Let us examine how each differs.
BPO
In BPO (Business Process Outsourcing), a particular process task
is outsourced. An example would be payroll. BPO work could
be either back office related or front office work. By front office
functions we mean customer oriented work like marketing,
answering calls, technical support and so on, whereas internal
work like billing and purchase come in the back office category.
Multimedia/ animation, book keeping, business consultancy,
CAD/ CAM, call center, DTP, data entry, proof reading and
editing, typesetting, handwriting services, marketing, medical
billing and transcription, web design and development etc are
all services that could be put under the BPO category

3. CLASSIFYING OUTSOURCING BY BUSINESS
PROCESS
• There are three categories of business process
outsourced are:
• 1)information technology outsourcing:
• 2)voice outsourcing:
• 3)non-voice outsourcing:

5. KPO
As is evident from the description, BPO activities involve
carrying out standardized processes for the client. KPO or
Knowledge Process Outsourcing typically calls for work that
needs higher levels of involvement from the worker. The
worker has to employ advanced levels of research, analytical
and technical skills and has to make decisions of a higher
order than BPO work. Examples are pharmaceutical research
and development, patent/ intellectual property
research, animation and simulation. Data research and
analysis, legal services, content writing and development and
database development services. KPO industry is less older and
mature than the BPO sector.