There are many top of the line offshoring organisations like Wipro / Infosys / TCS etc. who firmly believes in Innovation. Just to add Wipro's latest theme is about 'Applied Innovation.'
However, I can understand the disatisfaction level of CIO's for outsourcers not being innovators. But, at the same time the organisation needs to treat them not as outsourcing partners but as part of there own system and to innovate any new thought, it's very important to understand and learn the original features and processes.

Very interesting! We are a service provider - and we work with ISVs - the software vendors - whose entire existence is dependent on their innovation.

At one point in time, we even considered if we can christen our tag-line as "Outnovate" meaning Outsourcing Innovation.

Not because we could innovate completely for our customers. But because creating success through innovation does not stop with idea - but success comes because of execution of an innovative idea. Since we help "execute" innovative ideas - which is all we do due to our work with innovative software firms - we thought we can call ourselves as a company that you can outsource innovation with!

But, at a very fundamental level - outsourcing is about handing over non-core activities to experts in those non-core activities. How can "innovation" be outsourced? Is that a non-core activity of yours?

Can the outsourcing company be made to go beyond what the customers are specifying? Yes. Only by involving the people in your decision process, and by setting the expectation and reiterating the expectation.

As service providers - do we want to promise that to our customers. We sure do. Do we have people who can contribute improvements beyond what is being specified? We sure do! But, does that happen automatically? No. Like in any people process, stakeholder commitment and follow-through is needed for harnessing the potential of any initiatives beyond the call of duty.

So, my 2 cents to CIOs and CTOs:

-- Ask questions triggering innovative answers / solutions. Keep asking with all people involved including your internal people and outsourcer's people.

-- Show that you are willing to listen to the comments / suggestions and if you do not, take the pain of explaining why you do not want to take it. Nobody wants to advise / recommend to deaf ears.

-- Make sure that you respect the people involved as people with ideas that can improve your business.

Bhoo Thirumalai
www.aspiresys.com

Companies can't get innovation from outsourcing relationships for the same reason they can't get innovation from internal IT departments. The reason is that businesspeople do not take any proactive interest in technology, and do not find anyone in their technical ranks who can speak to their real business issues. Sourcing is not a magic wand that can fix this problem. And as the article says, you can't buy on price (commodity IT resources) and then demand value (innovation).

The situation will never get any better until companies come up with real strategies for developing individuals with mixed skill sets, in IT and their business domains, and give these people a significant role. Today, even most CIOs are still glorified techies. Until it takes a more proactive interest in changing this situation, the business side can only blame itself.

It seems to me that significant innovation comes from a deeply rooted knowledge of the business, an exceptional understanding of what our customers need, and a passionate pursuit of ways to meet those needs in a manner that substantially differentiates us in the minds of our customers from our competitors.

That should be the at the core of our business...why would you turn that over to a vendor?

Outsourcing seems to work best with defined tasks or objectives that are repeatable and predictable. Innovation isn't easy and it isn't cheap. If we aren't serious enough about innovation to own it, then it isn't truly a priority.

Most of the time, the requirement for Innovation is stated as a wish rather than a mandate/expectation. Here are some of the things one can do to inject seriousness of the 'innovation part' of the outsourcing deal:

1. Come to a common agreement of the areas and scope of Innovation.
2. Define parameters by which the ideas would be measured and the benchmarks/threshold which they have to cross.
3. Governance structure to periodically review the outcome. There has to be an operational level interaction as well as strategic level interaction.
4. Separate insights and intellectual property so that it is clear where one needs to haggle.
5. Participate in the innovation process at operational level and experience it. That would not only help you judge the quality of the activity, you can also contribute.
6. Understand that if the innovation has to be relevant to you, your inputs and involvement are requires

Doing these things dramatically increase the probability of satisfactory outcome.