I read with interest the other day an article from CIO titled “IT Outsourcing: 3 Reasons Your Vendor Won’t Innovate” by Stephanie Overby. At first, I thought, here we go, another article bagging outsourcing. I had to bite my lip and read on.

The article referenced research performed by Forrester Research. It has credibility. It showed 38% of customers expected more innovation from their outsource vendor, and customers wanted more than just cost savings. Okay, point noted, I thought. But we offer the latest technology and are always open to our customers how we can use it to solve their business problems. So why does this sentiment still exist?

Forrester Senior Analyst Chris Andrews puts it quite simply, its you, the customer! Now, i’m the first to realise that one should never blame the customer; that’s really bad business. But I think the point here is how do you communicate with your vendor to make the most of your investment. It’s not all one-sided thought, so I’ve also extrapolated where vendors are to blame, which I’ll later touch on. But for now, let’s have a look at the 3 reasons why customers don’t get enough innovation from their Outsourcing Vendor:

1. You don’t know what you want. Innovation comes from innovative people. If you have an innovative idea for your business, let your Outsource vendor know about it. We love this kind of stuff! Unfortunately, we’re not too flash in coming up with market leading ideas for your industry, but give us a bit of an idea of what you want to do and our imagination will run wild with how we can help you achieve this.
2. You chose the wrong provider. You need to figure out what innovation means to you, and then find a vendor that aligns with that. So you need to understand whether you want to simply cut costs or whether you want to form a strategic relationship with your vendor. Ultimately, if you’re not happy, take it to management, and if it still can’t be resolved, it’s time to look for a new vendor.
3. You didn’t set up effective innovation metrics. You need to establish your desired outcomes, and incorporate them into a service level agreement. More often now, we see this as the delivery of specific business requirements such as processes and workflows, that provide our clients with a positive ROI, say within 12 months.

So summing up the Forrester Research, outsource vendors aren’t the primary reason you may not be seeing innovation in your business. It is a factor of understanding what you want to achieve, selecting the vendor that will help you achieve this, and ensuring your objectives are being met.

Now, as promised, let’s look at where the vendors are to blame for lack of innovation. The lesson to me is that outsource vendors need to understand their client’s businesses thoroughly and continually present new technologies and discuss ways we can help improve your business. I know that I already do this to some extent, but rest assured, my intensity will be amplified.

I’m also pretty sure that our outsource model enables innovation better that most other vendors. I believe we achieve this by having one of our staff members assigned onsite to each customer. Generally it isn’t a full-time role, just one or two days per week, however it provides regular face-to-face contact, an opportunity to discuss how your project is progressing and a chance to note new requirements and discuss how we jointly can resolve this. All the while, we offer this at a lower cost. Isn’t this the exact point of outsourcing?