In another of her interesting posts on the Harvard Business Review site, Susan Cramm asks if outsourcing destroys IT innovation. In my most decisive opinion, I can safely say the the answer is Yes and No.
In the Yes corner, an organization that outsources IT will lose any innovations that would have been dreamed up by the tech guys. But then again, an organization that outsources IT probably wasn’t looking at that department as a source of creativity anyway. Using Cramm’s own terminology, companies like that view their IT departments as butlers.
Meanwhile, people in IT — inside or outside the parent company — will continue to do their work. They’ll poke around the network, read up on operating systems, write code, and generally contribute to the store of knowledge. If they have been outsourced, the beneficiary will be the outfit providing the service.
It is often argued that companies in the West that outsource manufacturing to India or China are holding on to the “high value” R&D jobs back home. Citing Andy Grove, former CEO of chip giant Intel, Cramm says a vital part of the chain is broken when that happens. I agree. I have long thought that, if manufacturing or administrative processes can be shipped overseas, what is to stop the “sexy” jobs following them?
You just have to look at sites like Outsource2India.com to see how they are offering research services. Indeed, closer to home, the Irish Industrial Development Authority (IDA) is making a major play to position Ireland as a destination for firms interested in innovation. Companies grow as single entities for a reason. Things like manufacturing and IT are vast stores of information. They should be tapped and exploited, not flogged off to the lowest bidder.
Butler photo by Glamhag on Flickr.com.