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Key Points
  • If a company knows how to extract insight, knowledge from its markets, from its consumers and on its competition, then its competitive advantage will be more sustainable
  • Benefits of knowledge centers of excellence is that all processes are under one roof, so they are going to be more efficient and standardized
  • A lesser known benefit is the ability to really overcome the corporate silos: the silos that exist between the marketing, sales and planning departments
  • Most companies today lack the analytical sophistication and have a poor understanding of where the knowledge processes are within their organization

Josh: Hello and welcome to the WNS business insights podcast series. This podcast series brings you the latest trends and concepts in your industry and in the field of outsourcing so that you can make your outsourcing programs even more successful. My name is Josh Passman, your host for this podcast and with me on the call is Anish Nanavaty, CEO of WNS research and analytics services, part of WNS, a leading global business process outsourcing company. Today we will discuss with Anish the trends he is seeing in research and analytics outsourcing. We’ll also discuss with him the very interesting concept of Knowledge Process Outsourcing (KPO) and the establishment of knowledge centers of excellence. Hello Anish and welcome to the WNS business insights podcast series.

Anish: Hi Josh. Thanks for having me. It’s great to be here.

Josh: Anish, I’ve gone through your recently published KPO white paper titled ‘Armed with Knowledge: Gaining competitive advantage through Knowledge Process Outsourcing.’ And I was intrigued by the way you’ve made the case for knowledge and analytics as a competitive advantage creator. Can you tell us a little bit more about this?.

Anish: Sure Josh. As you know there are a number of ways in which companies generate competitive advantage in the marketplace. Things like unique manufacturing techniques, international supply chain or some other type of intellectual property that exists within their product or their service. Now what is common about all of these different ways of creating competitive advantage is that one can’t really do this without having some unique insight and the process of extracting that insight from data is really what Knowledge Process Outsourcing (KPO) is all about. So in our view, knowledge is at the heart of creating competitive advantage and in fact you know, many of these things like a unique product or a unique intellectual property, those kinds of advantages can be lost over time. As you know markets are very competitive. But the skills of a company in terms of gathering insights, extracting insights; that’s a skill which actually never is lost and so if a company knows how to extract that insight, extract that knowledge from its markets, from its consumers on its competition then we believe that the competitive advantage gain will be more sustainable and hence better.

Josh: Anish, I know that WNS is at the forefront of setting up knowledge centers of excellence for companies. Can you help our listeners get a better understanding of the benefits of establishing a knowledge center of excellence?

Anish: Sure Josh. Let me take a minute to explain what a knowledge center of excellence actually is. In its simplest form, a knowledge center of excellence is nothing more than an analytical hub, a hub which has quantitatively oriented resources. People like statisticians, analysts with MBAs, data engineers that know how to use tools like SAS and SPSS. These are the kinds of resources that exist within these knowledge centers of excellence. And these knowledge centers of excellence plug back into the organization in two fundamental ways. One is that they connect back into all the different functions within a company. So sales, marketing, MIS, planning, etc. And this because most of our clients and most companies that have knowledge centers of excellence are global, the second is that these analytical hubs connect back into all the different geographies in which a company needs analytical support. So, a good way to think about this is knowledge centers of excellence are really shared service environments out of which research and analytics are sourced by an organization at a global level, and in each of their different functional areas. So if the question is what are the benefits of having these knowledge centers of excellence, there is the obvious benefit that is very similar to that enjoyed by all kinds of shared service centers. When you have processes under one roof, they are going to be more efficient. They are going to be standardized. They are going to be quality checked. You are going to be using best practices. So those are some of the obvious benefits that flow from a knowledge center of excellence.

A lesser known benefit is the ability to really overcome the corporate silos: the silos that exist sort of between the marketing department, the sales department, the planning department. Because you have themes that are plugged into each of these organizations, you find that they can share information between themselves, and achieve their analytical objectives in a much easier fashion. This is particularly useful in processes like forecasting which is a great example. Forecasting is a highly collaborative and analytical process and requires very close interaction with all the different departments within a company. Having a knowledge center of excellence where all of these different departments are represented is a huge advantage in getting your forecasting function right. So Josh, those are some of the benefits of implementing a knowledge center of excellence for a client.

Josh: Anish, that sounds very compelling. Can you give us some examples of how companies are leveraging business process outsourcing (BPO) to build these knowledge centers of excellence?

Anish: You know Josh, you can actually set up your own knowledge center of excellence within your organization, but there are some challenges in terms of doing that. The first is that in our experience, only the largest companies have enough analytical sophistication to set these kinds of knowledge centers of excellence up. You know companies that are very sophisticated when it comes to research and analytics are very scientific about how they make their decisions. They collect vast amounts of data. They have talent throughout the organization that analyses this data. You have a general culture within these companies about the importance of having decisions led by quantitative rigor. These kinds of companies actually know what their knowledge processes are, where they reside within the organization, what is the importance of these knowledge processes, what is the health of these knowledge processes. They know enough about this eco system that they can actually extract these processes and co-locate them in one place. You know your knowledge center of excellence that we’ve been talking about.

Unfortunately today, most companies today lack the analytical sophistication and have a poor understanding of where the knowledge processes are within their organization. That’s really where a company like WNS can help. So we worked with many of these large analytically sophisticated organizations. We know what these processes look like. We can design them for our clients; we know what they have to achieve from an output perspective; we know how to create collaboration in these processes. So that’s one way in which outsourcing can help. If you don’t know what the knowledge process is supposed to look like, your outsourcer can design it for you. The second place where a company like WNS can help is really in the resourcing of these processes of the centers of excellence. The kind of talent you need to staff these centers of excellence is not easy to find especially if you are not a top tier player in your industry, it would be difficult to attract and retain this talent.

Because WNS is in the market for these kinds of skills, and we offer these kinds of people the ability to actually work in a varied environment with many different clients on many different business issues, we find it a lot easier to recruit this talent, and retain it of course. I think the final advantage from a resourcing perspective is the cost aspect. Most of our clients are in developed markets. They could certainly set up a knowledge center of excellence and I would bet that they would probably wind up setting one up in their headquartered city. In developed markets, that can be an expensive proposition. Given that companies like WNS have the ability to tap this talent at a global level, we can choose the right geographies and the right cost structures, making analytics and research a cheaper skill to consume whether it is the cost of it or the ability to recruit and retain the talent is a fundamental advantage that an outsourcer can bring to the table.

Josh: So, how does one begin on this initiative to set up a knowledge center of excellence?

Anish: Well, it’s not something that happens overnight Josh. There are two ways in which one can think about getting started. A company that’s analytically sophisticated can probably identify the most important analytical task that is being done within their organization and they can take that task and begin to outsource the lower value added pieces of it initially. So, once the team has actually understood how to do more elementary tasks, they can move on to higher value added processes within that particular function or that particular process and then sort of you know the logical thing to do is to add more contiguous processes. Let’s say, the process that is being considered is forecasting, pricing, one can take volume elasticity analysis, etc and start moving those contiguous processes into the same knowledge center of excellence and then move on to other functions. So that’s one way in which you can get started.

For companies that don’t really have many knowledge processes or have a poor understanding of what knowledge processes exist within their organization, they should probably take the business issue that eats them up at night the most and that could be pricing, it could be market share loss in certain markets, and organize the knowledge center of excellence around that particular analytical challenge. Typically, that could reside in the marketing department or the sales department and then add contiguous processes and move on to other functions from there. So I think the two ways… either you know which analytical process is well developed and you directly extract lower value added functions out of it to get started or you take a business problem that you want to solve, and organize a center of excellence around that and then whichever way you start, it is going to be a two three four five year journey before you have all the right skill sets and you are addressing your analytical and research needs across your global footprint and across your multiple departments within your organization.

Josh: Thank you Anish for an insightful and a very topical conversation. I am sure we will be hearing a lot of discussion and debate on how companies need to reinvent themselves to come out of this economic storm and the role that Knowledge Process Outsourcing (KPO) can play in that process. It really sounds like setting up an outsourcing knowledge center of excellence is one way for companies to become more competitive.

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