Seventhman Blog

Bridging Outsourcing and Innovation in the 21st Century

"outsourcing_and_innovation"Innovation is like a nebula for many businesses and yet, everyone is hungry to have a bite of this fuzzy word to become globally competitive these days.  We all know that cost savings is the top driver of an outsourced project and next to it is direct access to quality expertise.  Then, we have strategic benefit that one can get when outsourcing a project – from freeing up one’s resources, flexibility to changing the rules of the competitive market.  Seldom do we hear innovation as the major reason for outsourcing and yet, it has become one of the biggest disappointments executives have today.  It’s not a surprising news, really.

The Ugly Truth:  There’s No Reward for Innovation

Outsourced providers are given a set of standards for operating within the cost and there’s just no reward for bold moves in these deals. That’s the reality.  Innovation in outsourcing involves change and the need to do things differently, which can disrupt the work flow.  So, how can businesses succeed in innovation at outsourcing?  Or, is it even possible?

Making Room for Open Innovation

If you want to get more than just the regular supply of goods or services from your outsourced provider, you can open up the communication channels to welcome new ideas that can help solve problems, or create new opportunities for the business.  The key here is involving everyone, giving them a voice that will make them feel part of the project.  This feeling can be powerful enough to make them more productive at work because there’s a sense of ownership that’s non-existent before.  Innovation must start from within..

Change Management with a Vengeance

It’s human nature to resist change and yet, innovation can only happen when people are willing to accept a change.  This is where multi-tiered governance comes in to help manage communication and operations between the business and vendor’s executives.  Good governance matters a lot here and it’s like conducting a philharmonic orchestra; you’ve got to make sure the rhythm’s right.  How do you get key stakeholders play along with everyone else?

Fixing the Innovation Cycle

A report from Gartner shows that innovation is lacking in outsourcing deals in 2010, where focus is centered on cost instead.  This year, more businesses are allocating funds for innovation and they are aware of the risk of failure.  If innovation is hard to come by in certain departments, getting an external consultant may be the answer – to bring down costs.  The only question is:  Will people within the organization build resistance to the outsider, keeping him/her from adding innovative value?

Innovation, like outsourcing, is a strategy.  Can the two work seamlessly together?  Many are trying to bridge this gap, especially in new territories that run with cultural and geographical barriers.  In a good business sense, the right outsourcing vendor have a big room for innovation – where people are equipped with the expertise to develop innovative applications to whatever niche it is required for.  Sometimes, all it takes to innovate is taking… baby steps.