Generating Innovation in Offshoring Relationships

Danny Ertel

In addition to whatever else may drive a company’s decision to outsource, management nearly always expects, demands, and obtains some near-term cost savings. In many cases, those savings are made available immediately to the customer via an invoice from the provider for less than what the company used to pay to deliver the services internally. But as the relationship goes through its transition phase and stabilizes, customers begin to ask their providers, “What have you done for me lately?” and “Where is my innovation and continuous improvement?” Even when outsourcing isn’t “supposed” to be about innovation, most customers expect it — and are dissatisfied when they don’t get it. Unfortunately, few organizations manage to generate the innovation they desire in their outsourcing relationships.