Businesses go where their customers are and work goes where there are skilled workers and lower wages. Business process outsourcing started as a way to lower the cost while ensuring there is no compromise on work quality. But today a new wave of revolution is sweeping through the corporate corridors where enterprises are increasingly outsourcing their business processes to drive innovation and gain a definitive competitive advantage.

Enterprises can concentrate more on their core competencies while letting a third party do a lot of the non-core activities in a cost-effective manner. That was the initial spur. But today’s business goals are challenging and customer expectations are sky-high. Thus it was back to the drawing board for most companies to figure out a way of delivering on those expectations or risk losing out to the competition.

Thus was born business process outsourcing for innovation and organizations are slowly beginning to realize the potential of the idea and are investing big time. Coming up with the next big business idea or revolution needs consistent research, resources, competent workforce and the ability to think outside the box. Now most companies cannot afford to do that even for a short duration of time. So this calls for outsourcing to a competent entity and staying ahead of the curve.

A definitive edge for IT outsourcing:

IT Companies all around the world are expected to do more with fewer resources and it looks like this trend is going to get more intense in the days ahead. There comes a time for all organizations when it is practically impossible to conduct business without thinking of an alternative way of handling the business processes. All the while the competition is furiously snapping at your heels as customer demands get more exacting.

Information Technology outsourcing customers need to understand that cookie-cutter methods of rewarding the contract to a third party won’t work in such a scenario. Not all organizations that take up the contract of fulfilling the obligation of driving innovation can be gauged using the same yardstick. Innovation is not something that can be put in black and white. It’s all about the temperament of the outsourcing partner that drives innovation.

Innovation cannot be defined or bound by a Service Level Agreement. It is a process wherein there are continuous process improvements, use of cutting-edge technology, incorporation of global best practices, transformational decision-making, a view of the big picture with the upshot of providing a clear competitive advantage to the client.

 The vendors cannot be expected to come up with innovation if they do not understand the ins and outs of the outsourcing company’s business. There are various types of innovations like radical innovations, continuous improvements, business and project innovation among others.

Consider a company that has outsourced the contact center process. Then the vendor providing the service can do much more than handle the customer calls. A lot of data is generated during each call. The service provider can use analytics and sift this data to come up with meaningful insights. This way highly valuable recommendations can be provided to the client so that more innovative ideas can be part of the business process.

A service provider that handles the corporate website of a large multinational company is by contract obligated to maintain and keep the site in good shape at all times. But it can use innovative methodologies to find out what does and doesn’t work with the client company’s end users. This way the vendor can provide more than just a maintenance service and be part of the innovative team driving change across the business enterprise.

For true innovation to happen here are some of the most important rules that need to be followed:

• Your contract itself should spur and reward innovation all along the way
• List out the main objectives of the business in no uncertain terms
• There should be clear communication between both the parties at all times
• The team that comes up with innovative solutions should work closely with the team that implements the solution.
• There is always risk when you have a bold initiative and hence the risk taking appetite has to considerably increase
• Failure should be the stepping stone for success and should not be unduly penalized
• Pilot test the innovative ideas in your own way in order to avoid large-scale negative impact.