More organizations plan (out)sourcing for innovation and growth than for cost-cutting, says @IBMCAI study of 97 executives.

Recently, IBM conducted a survey of 97 C-Suite Sourcing executives and found that seven out of ten plan to outsource for strategic reasons like driving growth and innovation. Based on their chief motivation, we categorized these organizations as:

  • Cost-cutters–27 percent outsource their IT infrastructure to reduce operations costs
  • Growth-seekers–37 percent outsource IT infrastructure, application management or business processes to achieve operational efficiencies and revenue growth
  • Innovators–36 percent outsource multiple parts of the business to enable transformation and innovation

What we found most interesting was the progression of objectives across these three groups. Cost-cutters indicate they want one primary outcome from their sourcing relationships: cost savings. The majority of growth-seekers want to reduce costs, but also faster time to market for new products and services, and increased efficiency and effectiveness across the entire value chain. Innovators expect all of the above–and more. In addition to cost reduction, speed-to-market, and value chain efficiency, the majority of innovators want providers to help them:

  • Drive front-office effectiveness (not just back-office)
  • Better anticipate and respond to disruptive technological changes or market forces
  • Proactively manage risk, compliance and security via technologies like predictive analytics
  • Share risks and rewards based on business outcomes

These findings suggest a shift in the traditional outsourcing market. Innovators are looking beyond outsourcing primarily for cost savings as they source for competitive advantage and desired business outcomes. Our paper, Pushing the limits of outsourcing: Innovators reinvent the services relationship, explores these themes in more detail. The paper can be accessed on our CAI web page.

Downloadable report on Pushing the limits of outsourcing: Innovators reinvent the services relationship is at http://public.dhe.ibm.com/common/ssi/ecm/en/soe12346usen/SOE12346USEN.PDF .

Removing the “Out” in Strategic Outsourcing: Reframing a Shifting Sourcing Market | Caitlin Halferty | Oct 30, 2012 | IBM Center for Applied Insights at https://www-304.ibm.com/connections/blogs/IBMCAI/entry/sourcing_removing_the_out_in_strategic_outsourcing?lang=en_us.

Caitlin Halferty | IBM Center for Applied Insights