The Next Big Thing
Posts about next generation technologies and their effect on business.

Outsourcing, innovation and a changing services market

innovation unlock.pngLast week I posted on multi-sourcing and its implications on IT cost that got me thinking about a post in CIO titled: U.S. Beats India for IT Outsourcing Innovation and Understanding that reinforced my frustration with those who equate outsourcing with off-shoring. Yes, there is a geographic connection, but let’s not make it tighter than it actually is.

 

For over a decade the organization that is currently HP ES has been using the concept of best-shore to ensure that the right people with the right skills are applied to the problem at hand. The broad brush labels used in this CIO article just do everyone a disservice, in my opinion. The issue of innovation and outsourcing has been around for a long time.

 

People are not fungible – they bring a unique set of skills, resources and capabilities. The offerings in the services industry (beyond the most basic IaaS) are about selling people’s capabilities, especially to larger organizations that want solutions tailored to meet their needs. That is part of where the innovation in the services space comes from – doing custom work in a standard way. The relationship has to be structured to make innovation happen.

 

The use of other organizations to extend the enterprise is a strategic decision that needs to be treated as such. It is not just about cost cutting. It is about meeting the needs of the organization for quality, security… , as well as cost effectiveness, using whatever means are necessary. As organizations move their service needs up the value chain into more personalized/consumer focused services, these quality issues are paramount, since a confused or frustrated customer is typically not a return customer. The focus needs to be on quality. The geographic location is just a distraction, if the quality is the same.

 

Gartner recently put out a video describing some of the forces that are reshaping the fundamentals of how IT services providers.... Delivery models and methods are coming that will improve the quality, predictability and value of service offerings. It may be that greater physical "face time" improves the relationship more than just the cost benifits, regardless of where the work gets done.

Comments
Alleli of Infinit-O(anon) | ‎11-12-2012 09:48 AM

In choosing an outsourcing company, geographic location may be one of the greatest factors that would affect every company’s decision. When you think of a place or a country, you will also think about its economics, the prices and packages that the outsourcing companies may offer, and its talent pool. All of these factors will vary depending on the location you would choose. Every country has something to be proud of when it comes to outsourcing!

Hannah Martinez(anon) | ‎11-13-2012 03:47 AM

Thanks for your blog posts.   They're helpful as I do research about IT and CIOs.  Speaking of "selling people's capabilities"....This weekend I had the opportunity to meet the new CIO at HP, Ramon Baez.  Wow, he was not only down to earth but cool.  He was motivational and could connect with different people.  I'd be on the look out for great things, God's favor walks with him...great move HP.

 

Hannah, Byron Nelson High school, Honor student and Varsity Diving team.

| ‎11-13-2012 01:36 PM

Ramon and I have interacted at SMU as part of a curriculum advisory board for the business school. He definitely is a good person to get to know.

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