Relationship between outsourcing and innovation
From wsuwiki
There are people who think outsourcing helps innovation. And there are some who think outsourcing is bad for innovation.
Darwin's theory of survival of the fittest can be seen as an analogy to the innovation world. With the rapid pace of internet, it can be "innovate or you die".
Creativity, fast and continuous innovation is what helps any successful business.
This article will look at pros first. Then look at cons secondly.
Contents |
Pros
In order to compete in this competitive world you have to be ahead in innovation. The success of a business depends on how creative they are and how fast they innovate, so outsourcing can be quite useful. Outsourcing can bring new or fresh ideas and perspectives. Outsourcing can also bring great expertise that may not be found internally. This would then help managers to be flexible and think ahead. Management also can then have more time to put more effort on core competencies and the innovation cycle. Outsourcing helps in lowering costs.
Cons
When companies outsource some of their work, they are thinking in terms of cutting and lowering costs. The emphasis then becomes about cutting/lowering costs and this stifles innovation. If managers do not use outsourcing, they will miss out on fresh ideas and perspective which help innovation. Managers can fail to do things quickly because they have too much on their hands. And this can mean being somehow inefficient So outsourcing is the best solution.
Conclusion
Whether outsourcing is good for innovation depends on the needs and priorities of the company. If the company's priority is lowering costs no matter what, then maybe outsourcing can be suitable. Otherwise each company has to do a cost benefit analysis.
References
http://blogs.businessweek.com/mt/mt-tb.cgi/8827.1362114129
http://wwww.businessweek.com/adsections/outsource/outsource99/sourceindex.htm