Indian outsourcing companies realized that clients are more
interested in innovation along with cost and process efficiencies. Clients are interested in paying more for the
transformational and innovation projects and product offerings. Initially it
was sending technology workers to companies in the west for work onsite, then
came the offshoring which is the traditional model of outsourcing based on the
client needs and the latest third wave in Indian outsourcing is where companies
design the platforms and systems that facilitate innovation and efficiency. But
the fact remains that till now there has not been a disruptive offering from
the Indian Outsourcing vendors. According to a 2011 Forrester survey, 41
percent of outsourcing clients cited lack of innovation as the biggest
challenge with their existing IT services relationships.
Clients interviewed by Jan Erik Aase, (Sourcing & Vendor
Management analyst-Forrester Research), identified three types of activities
offshore vendors may try to pass off as innovation that failed to meet their
expectations: innovation-for-pay (vendors creates a solution
for one client and then licenses it back as a product to that client and the
larger market), innovation for innovation's sake (emerging tech
from vendor R&D labs that don't solve a customer problem), and administrative
innovation (IT services buyers don't view process improvements,
project management tools, relationship dashboards, and the like as real
innovation). Clients want innovation relevant to their specific needs such as
solve business problems, transformation in doing business, commercially viable
solutions, creates competitive differentiation, improve market share, or have
"an ROI with a multiplier of at least two”.
Innovation @ Top
Indian Outsourcing Vendors (TCS, Infosys, Wipro)
Indian Vendors realize that Innovation is lifeline of
business and is a critical factor for success in outsourcing industry. They
know innovation is a complex process and is a vital component in their business
strategy and in order to stay ahead, companies should increase the speed of
innovation, be focused on the customer experience, understand their behavior,
and co-create with customers and partners. Innovation has to be instilled into
the organization at all levels and companies have done this successfully. The
top three Indian outsourcing vendors have around 500,000 employees working in
their organization for clients across the globe. They constantly innovate and
improve the process efficiency there by leading to cost and other benefits for
the clients. They work 24/7 for the clients and the innovation which most of
the employees do on the day to day basis is called derivative or sustainable
innovation.
All the three vendors are using their in house intranets,
employee engagement and social media platforms for the idea generations. These
platforms provide an opportunity to express their innovation ideas to the
management. Managers and Leadership are being trained to act upon these ideas
by the employees, evaluate them, commercial viability of the ideas and finally
implement them and develop product and service offerings. Formal trainings for
the employees include innovation and creativity. For the training programs they
are employing third party consultants and experts and also tying up with the
academics and other research institutions. Rewards and recognitions are
provided for the employees who provided successful innovative ideas and
Innovation is also part of the employees’ formal annual performance reviews.
The vendors have invested on the training of the employees, provided them with
necessary platforms and are investing and developing the ideas into final
products and services.
Annual Innovation Events are being conducted where the
employees are allowed to present their ideas, conduct demos not only to the
management and leadership but also to the academic, clients, research, alliance
partners and other stakeholders. These events bring together all the
stakeholders of the innovation process and provide a platform to discuss and
debate on the various innovations. All the vendors have tied up with the
academic organizations, consultancies and other specific research organizations
and do work with them in developing the innovative offerings. Wipro
Technologies and Knowledge@Wharton together started conducting this tournament
in 2010 which selects the most innovative managerial "tools" that
companies can use to improve their business by increasing revenues, reducing
expenditures and improving customer experience
TCS and Infosys have setup exclusive Innovation labs and
these labs TCS Innovation Labs and Infosys SETLabs have been in existence for
the past 30 and 20 years respectively. These labs has developed several process
frameworks, methodologies, service platforms and work with standards bodies on
future technologies, share best practices and maintain peer relationships with
academic bodies, industry forums, conferences, and journals. Around 600 and 800
associates work in the R&D in the TCS and Infosys labs respectively. Wipro
on the other hand provide third party R&D outsourcing services to their
clients and they dominate this market. Infosys' SETLabs incubated the
Innovation Lab in collaboration with Prof. Venkat Ramaswamy in 2005 as part of
its research and innovation capability.
Frameworks are used by these vendors like TCS adopted Professor
Clayton Christensen Innovation frame work and Co-innovation network with
Clients and other stakeholders, Infosys adopted a Co-Creation framework based
on the book published in 2004 “The Future of Competition: Co-Creating Unique
Value with Customers" by Prof Venkat Ramaswamy and management guru the
late C K Prahalad. Co-creation is the practice of developing systems, products,
or services based upon innovative ideas from stakeholder experiences, that
enhance strategic capital, increase returns, and expand market opportunities.
Wipro’s Innovation initiatives were developed based on a
study of innovation methods in companies like Nike, 3M, and Home Depot that
were reputed for their innovative practices and Applied Innovation which is the
ability to infuse newer ideas and newer ways of doing things into all parts of
the organization, and improve business outcomes, often without major disruptive
change. Wipro Technologies, Innovation Evangelism happens through a series of
vehicles that include: Wipro’s Innovation Camp, Innovation Bazaar, Story Book
on Innovation, Systematic Creativity Workshops, and Inflection Point
newsletter, etc
Despite all these efforts and investments India Vendors have
innovated products which are more of sustainable kind and platforms that are
mid range platform innovation but they are not able to innovate a disruptive
offering. They have involved the employees and managers, provided tem with
necessary infrastructure, established labs with exclusive focus on innovation
and creation of new products, employed PHds and highly qualified people in
these labs, provided with necessary infrastructure and other technologies in
the labs, collaborated with all the stakeholders like clients, industry groups,
research and academic organizations etc. Co-Creation with the stakeholders and
forming strategic alliances with product companies and technology startups and
investing significant amounts of money and resources are the major strategies
adopted by these vendors. But success still eludes them.
Clients too have to make serious investments to profit from
the vendor’s innovation strategy. Clients should treat the vendor not just as
the cost reducing and process efficiency improvement partner but have to look
at the vendors as strategic partners for the business growth. Clients should
provide the vendors with the overall organization business strategy and make
them understand that their role is not only limited to the IT department but
also towards the overall organizational performance improvement. They should
foster such relationships with their vendors and look for vendors with good
innovation culture and strategies in place. It will be a win- win situation for
the vendors and clients if they work collaboratively towards developing the
innovative products and services.
All the players in the Indian Outsourcing industry realize
the fact that only way to survive in this highly competitive outsourcing
industry is to constantly innovate products and services that are relevant to
the clients and lead to revenue growth to both of them. Innovation is highly
complex and critical process that need significant amount of resources like
monetary investments, technologies and highly skilled and trained
professionals. The innovation Return on Investment is essential factor for both
clients and vendors and they have to work together for this.
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