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How can offshore providers innovate for their clients?

date: 7 December 2011
reading time: 3 min

CIO in the US recently published and article on innovation from offshore providers.

CIO in the US recently published and article on innovation from offshore providers. It raises many of the points that were discussed at the NOA’s Innovation Day earlier this year: Innovation is important to both customer and provider, but both have different interpretations of the term – customers are more focused on business-related innovation while outsourcers are more interested in the development process or technical innovation.  Larger outsourcers are trying to capitalise on this desire for innovation, but access to these services costs the customer more and requires additional resource from their team too, which puts off some customers. I completely agree that innovation is a vital part of any long-term partnership. I think however, that in many instances, particularly with smaller outsourcers like ourselves, clients are at first looking purely at having a project completed. They are not necessarily ready to trust their outsourcer with anything more.  Within these tight constraints it is hard to innovate.

However, as the relationship matures and both sides begin to trust and understand each other more, they can begin to work towards innovation. I also think that as both parties strive towards a mutually beneficial, longer-term relationship, there is some expectation of innovation from both outsourcer and customer. Innovation can be rather intangible and there clearly is no set formula for creating it. Larger IT services companies like Wipro, TCS and HCL have created their own methodologies, processes and resources to enhance customer innovation.

Perhaps this approach works for them – personally I find it a little heavy handed. Instead at Future Processing we have tried to allow our customers to tap into a wider network to provide a greater chance of innovation. This is actually something that Jan Erik Aase, a sourcing and vendor management analyst, highlights in the article I mentioned earlier. He says, “Smart clients will take advantage of the network of innovation that their offshore deals give them access to – from academic institutions to emerging tech vendors to venture capital funds. Accessing this information helps the client become engaged in an entire ecosystem of innovation that takes innovation well beyond rate card contract language and more in the direction of partnerships, joint ventures, and joint intellectual property.” What we have tried to do with FP Lab is create an environment that is a cross between an R&D facility and an incubator. Employees can use it to pursue ideas of their own and also ideas they have for our customers. We have also set up a ‘branch’ of FP Lab at the Silesian University of Technology – students can use our state of the art hardware and our expertise to develop their ideas and they (and their professors) can also help us innovate for our clients.

There is no way to guarantee innovation, just as there is no way to guarantee that both the outsourcer and the client agree that what has happened or has been developed is an innovation. But clearly innovation is an important part of any medium- to long-term outsourced relationship – offshore or onshore – and it is vital that outsourcers make strong efforts to foster it. If not they may find their customers looking towards other suppliers that do.

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