Outsourcing Leadership Blog

Innovation Through Acquisition

Posted by Bret Quist on Thursday, 11 March 2010 21:28

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Categories: Outsourcing

I’m always interested in hearing about the trends and best practices for maximizing the business value from outsourcing relationships. With the news of several outsourcing service providers being acquired (e.g., ACS/Xerox, EDS/HP and Perot/Dell) a common “trend” being touted is that the acquired companies should be able to leverage the innovation that comes from the Xerox’s, HP’s and Dell’s and apply it to their sourcing model thereby offering their clients something more than simply a lower-cost way of doing what they already had been doing via labor arbitrage.

Having dealt with many large scale systems integration projects, innovation is not just about applying new technology from the parent company. Innovation is about changes in IT operations, reinventing a business process entirely, developing new or improved products and services, or changing the business model or how the company competes. Yes, technology plays its part as seen in the Xerox/ACS partnership where Xerox can use its vast R&D capabilities to address the business problems of ACS’ customers. Add them together in a collaborative environment, and the hope is that they will be able to solve problems in new ways and provide new services to their clients.

So I’m wondering why developing this type of innovation is so hard for the outsourcers? Well, according to a recent Harvard article, collaboration is good but if you keep asking questions to over-analyze a decision an original innovative idea will never move forward because the process of getting the innovation to market takes too long. Hopefully, the new alliances will build collaborative environments that enable innovative ideas to be auctioned and go beyond the traditional outsourcing services. That’s a trend I’m sure we would all would like to see.

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