Organization, culture, skills, talent, tools, standardization –
together all these challenge a company's ability to become
a true knowledge competitor. But organizations that seek to
make rapid, substantive change are increasingly leveraging
knowledge process outsourcing (KPO) providers for higher
value, complex, specialized skill and knowledge-based work
such as research and analytics. And these forward-thinking
companies have not only found that providers are fully
equipped to provide industry-specific and complex problem
solving skill sets which enable them to become 360°
knowledge competitors, but also that they have implemented
privacy, security, and IP standards to mitigate any risk in
transferring critical data.
Today, there is a ripe environment for the kind of high-end,
strategic, partnership-based outsourcing that is KPO. A 2008
Economic Times article stated, ‘’According to reports, the
KPO industry is estimated to be between USD 10-17 billion
by 2010.’’ And while IT outsourcing (ITO) and business
process outsourcing (BPO) have grown at compound annual
rates of 34 percent over the last 5 years, and are projected to
grow at 24 percent a year over the next 5, a research report by
sourcing advisory firm TPI stated the KPO market is projected
to grow by 50-70 percent annually. This explosive growth is
due to KPO's value proposition.
How KPO resolves challenges to becoming a
Smart companies are never afraid to change the business
model when they must move corporate performance onto a
new trajectory. In the case of knowledge processes, companies
can tap into external resources when those resources can
deliver knowledge processes with higher quality, greater
efficiency and effectiveness, at a lower cost, in less time.
The following exhibit highlights how KPO resolves the
challenges faced on the path to knowledge centricity.
To underscore the benefits of KPO, consider what WNS's team
delivered to a leading consumer product goods company
seeking to become a knowledge competitor
- incorporated the effects of various below-the-line, in-store
elements on volume share, mapping sensitivity to volume
share to various changes – effects that linear pricing
models are unable to create;
- simplified the planning and execution of promotions by
crystallizing the dynamics of individual in-store elements;
- increased the accuracy of forecasting volume share,
providing 99.98 percent accuracy at the brand level and
63 percent accuracy at the SKU level;
- optimized the trade mix for maintaining share in various
- improved efficiency in retailer relationships by providing
easy-to-use strategies that can be communicated to
retailers, even those who lack statistical expertise, thereby
enabling the client to better manage in-store settings; and
- simulated changes in volume share that could occur when
various merchandising plans are modeled.
In its first phase, clients try out the KPO concept, testing
providers' capabilities by outsourcing lower-end, discrete
knowledge processes. Satisfied with performance, companies
often move to the second phase, testing the delivery of higherend
but still discrete processes, now delivered in a series or as
a part of a program rather than as one-off projects
The Knowledge Center of Excellence
As the leading KPO providers' offerings have evolved, so has
the range of industries to which they deliver services.
For example, in addition to delivering discrete market
research services to professional services firms or
corporations, KPO now provides comprehensive, domaintargeted
knowledge services such as business and financial
research and analytics to clients in a wide range of industries
including consumer packaged goods, consumer financial
services and retail, often to a level of sophistication that
cannot be rapidly or easily replicated in house. As it continues
to evolve and grow, the KPO market is moving toward a shared
services center of excellence model, the ‘Knowledge Center of
Excellence’, an approach that goes hand-in-hand with
developing 360° knowledge capabilities.
The following diagram demonstrates the evolution of KPO
services from discrete knowledge process work to integrated,
vertically-specialized services – not unlike the shared services
model that has been widely adopted for finance processes.
Over time, as providers assumed the delivery of end-to-end
knowledge processes, the metrics on which they are judged
have changed from simple service levels such as turnaround
time or accuracy to whether or not the client achieves the
business outcome it targeted by way of the knowledge process
(e.g., collection analytics).
When second phase success is evident, companies become
comfortable leveraging a wider range of KPO provider
capabilities. They are adopting an integrated approach to
knowledge work, asking providers to deliver higher-end
services such as customer lifetime value models or fraud
management models. This takes them closer to the end-game,
the establishment of a Knowledge Center of Excellence, where
knowledge is created by a vertically-specialized provider and
consumed throughout the organization.
Within these centers, resources are aligned with business
challenges such as pricing and forecasting, and
analytic/technical techniques such as data sets used and
statistical techniques. This specialization institutionalizes the
approach to similar kinds of problems. Further, analytic or
research tasks for business challenges are broken down to
match the resource specialization available – so a forecasting
effort is broken into research tasks and quantitative/modeling
Senior analysts then pull together the work output from the
team and synthesize it, extracting insights along the way.
Appropriate individuals within the client organization interact
with the centralized resource through web-based knowledge
portals regardless of where they are geographically based.
These web portals also serve as a repository for responses to
similar business challenges, helping analysts in different parts
of the organization learn from the efforts of their peers
thousands of miles away. The Knowledge Center of Excellence
model ensures that knowledge creation is standardized to
avoid disparate methodologies, leveraged across geographies
to account for unique market differences, and
institutionalized so that best practices are readily
disseminated across the organization.
Even as the provider generates actionable insights for the
client, the client is responsible for its consumption. And there
are plenty of opportunities for dysfunction when the client
acts on the insight. To avoid this situation, the provider team
must align with the client's organization. As a result of a tight
alignment, the knowledge center is increasingly considered
within the client's organization as the ‘glue’ that brings the
disparate functions to interact as never before, leading to
superior decision making.
Why the knowledge Center of Excellence
The knowledge center of excellence model of knowledge
creation and consumption works for a variety of reasons
It enables a true 360° approach to solving the knowledge
requirements of an organization in a cost effective manner.
Naturally, organizations wish address all their analytic
challenges in a holistic way. However, it is often
prohibitively expensive to house a broad range of deeply
skilled in-house professionals to oversee analytic solutions
that range from the strategic to the purely tactical.
The Knowledge Center of Excellence model is a shared
services environment where such high-end resources can be
made available ‘on tap’ – enabling companies to get that
360° view of the business.
It transcends geographies and corporate silos. The model
standardizes and integrates knowledge services to facilitate
knowledge consumption across all of the client's operations
in all geographies.
It institutionalizes knowledge. Knowledge is embedded in
the organization through the sharing of best practices
across geographic boundaries and corporate silos, thereby
enabling better decision making and fostering innovation
across the business.
It reduces turnaround times by quickly bringing to fore
resources and analytic output from similar engagements.
The Knowledge Center acts as a corporate repository,
storing and cataloging documents such as process and
training manuals that can be easily leveraged across the
Strong knowledge sharing practices reduce errors in
knowledge creation, thereby improving the quality of
It supplements sub-optimal skill sets in knowledge workers.
The center is comprised of a sizable team of resources that
includes individuals with deep domain knowledge as well as
those with deep analytics, business intelligence and
research skills. It makes for an exceptionally diverse, wellrounded
team. Further, these resources can be deployed to
meet an organization's ever-shifting analytical needs.
It is scalable. Data, processes, resources and institutional
knowledge within the Knowledge Center of Excellence are
organized to be scaled. Data is extracted from corporate
data marts, scrubbed and made ready to be used again and
again in a variety of ways by disparate knowledge processes.
Instituting standard operating procedures for knowledge
processes ensures that solutions are executed in a
consistent way with no need to go back to the drawing
board each time a challenge surfaces. Skills are
disaggregated so that no one skill becomes a bottleneck
delivering a particular solution. The shared services
environment ensures that slack resources can be redeployed
at a moment's notice for needs emerging around the globe.
While evolving a knowledge-centric organization is possible
internally, the challenges are myriad. And although KPO can
break through some of the challenges organizations face on
the road to knowledge competition, the opportunity to truly
compete with knowledge only comes with a complete 360°
view of the business – made possible through a verticallyintegrated,
domain-specific Knowledge Center of Excellence