Business process outsourcing (BPO) has proven to be a valuable solution for addressing business challenges, ensuring flexibility and agility. However, the growing average salaries in the CEE region and the developments in online collaborative technologies have enabled low-cost Far East countries to offer competitive service solutions to Western BPO customers. This study explores the innovation potential of establishing knowledge management (KM) practices in CEE BPO service centers, helping them ensure sustainable competitiveness in the global BPO market. The implementation methodology for this study is a single qualitative exploratory case study research design with embedded units. The study aims to discover how KM tools and methods are applied and accepted within CEE service center management for KM as an innovation and competitive advantage enabler. KM-oriented HRM strategies and practices have been found to motivate and encourage people to participate and contribute to knowledge sharing, identification, generation, capturing, enriching, reusing, and creating value.