Over the last couple of weeks, I’ve been reading the various discussions surrounding Outsourcing vs. Innovation, which all started with the CIO.com article by Stephanie Overby titled IT Outsourcing: How Offshoring can Kill Innovation. In her article, she interviews Harvard Business School professors, David Pisano and Willy Shih. The professors make the argument that overzealous offshore outsourcing can cripple a company’s ability to innovate. I couldn’t disagree more.
My thoughts on this align more closely with those expressed on the Horses for Sources blog and attributed to HfS COO, Esteban Herrera, who states that the professors argument is flawed. He counters that the lessening of innovation has nothing to do with outsourcing, but rather a lack of focus on and an inability? to execute a successful strategy, and one that most likely embraces outsourcing.
It is this strategy and its appropriate inclusion of outsourcing that I want to talk about for a minute. Similar to any other business relationship, the key to success builds on trust and involves give and take on both sides – a partnership. The partners then play to their strengths, and they can learn from each other (the vendor learns from the client and the client learns from the vendor). These “learnings” often involve innovation and innovative ideas that help both sides in the partnership succeed. If you keep this in mind, and chose an outsourcing provider partner that has innovation as one of its core tenets, then you’ll be well on your way to growing and succeeding at solving some of your most important business issues.
A great example of how this can work is documented in a recently case study on how HP Helped Improve Efficiency and Reduce Costs for AOL. This case study discusses how AOL continued its leadership in business and technological innovation by focusing on improving the agility, consistency and cost-efficiency of its Finance and Administration Services operations via:
- Moving to a shared services operating model
- Implementing an ERP system
- Transferring transaction services to a low-cost region
Also, for more info on how outsourcing and innovation can work hand-in-hand, check out the HP Enterprise Services Market Perspectives website that deals specifically with Innovation. And as always, if you have any thoughts or questions regarding this topic, please feel free to leave me a comment on this blog post.