Innovation Outsourcing – 2024 Guide

The development of the innovative sector of the economy leads to an increase in demand for providing commercial support for innovative projects. This contributes to an increase in the supply of outsourcing enterprises with services to provide infrastructure support for innovation. The SpdLoad article details the benefits of outsourcing.

Commercial support of innovative projects from outsourcing organizations can provide both infrastructural support for individual sectors and can represent a whole range of mechanisms aimed at improving the efficiency of development, implementation, launching and subsequent support of innovative solutions.

Innovation outsourcing is a strategy whereby businesses organise the generation of ideas, develop plans to bring these products to market, or both, and then delegate their implementation to external agencies. This is similar to the infrastructural organisation of innovation, in which processes are developed and managed from a remote location independent of where they are actually developed. The main aim of this outsourcing strategy is to reduce costs. Outsourcing the work of the innovator can be cheaper for both the business owner and the innovator. Outsourcing the work of the innovator facilitates the overall management of the business.

There are many companies offering innovation outsourcing services to transfer knowledge and implement innovative ideas. For example, companies in Malaysia, Singapore, South Africa, the US, Canada and the UK offer strategic outsourcing, business process outsourcing and project outsourcing. An example of such companies is Develux . Strategic outsourcing, business process outsourcing and project outsourcing involve different things, but have the same goal of reducing product costs, increasing employee productivity, and maintaining or improving the quality of services provided by their respective companies.

Innovations tend to be expensive and usually take many years to materialise. Therefore, instead of investing a lot of money in research and development, business owners are looking for ways to reduce the costs associated with creating new innovations. To solve these problems, they turn to innovation outsourcing. Thus, we can say that innovation outsourcing is one of the major developments taking place in business process management.

However, the processes of integrating outsourcing activities into the sphere of innovation implementation face a number of constraining factors. The latter include:

– the need to maintain trade secrets;

– the complexity of the integrated and synchronized solution of heterogeneous technical, technological and organizational and management tasks;

– high uncertainty in predicting the processes of implementation and diffusion of innovative projects;

– an additional increase in the risk component of the innovation implementation process due to dishonesty of individual outsourcing companies, and inefficiently built system of their internal functioning, insufficiently developed mechanisms for inter-collegial interaction, and so on.

Many customers are wary of using outsourcing as a way to accompany business processes because often outsourcers are used to working on a stream-conveyor basis, quickly solving only the current tasks of customer companies, often remotely. This scheme of work is largely due to the fact that outsourcing enterprises always work simultaneously with several client companies, which allows for increasing profits.

The mono-profile orientation of outsourcing activities is also an obstacle to its implementation in the processes of supporting innovations since the tasks of infrastructure support of the project pose problems of synchronization of the effective interaction of various external contractors. This additionally increases the risk component of innovative projects and has a negative impact on the effectiveness of their implementation.

The need to overcome these constraints creates a new type of outsourcing activity – innovative outsourcing, which is currently in its infancy.

In scientific literature, the concept of innovative outsourcing is considered either as a tool for implementing restructuring outsourcing or as a way of supporting non-core processes of innovative projects

The growing demand for providing integrated infrastructure support for innovative projects, on the one hand, and the need to overcome the factors that impede its implementation in innovation implementation processes, on the other hand, create objective conditions for the establishment, development and scientific understanding of innovative outsourcing as a specific form of infrastructure activity.

It is important to note that modern outsourcing development technologies tend to be constantly updated. This is due to the continuous improvement of tools, techniques, and criteria for evaluating the functioning of outsourcing systems.

Outsourcing often acts as a source of innovation. This is due to the permanent need for enterprises operating in this field to constantly search for original ways to resolve non-standard problems put forward by customers, which is most evident when providing support for innovative solutions. “When implementing innovative outsourcing, the latter can independently act as a source of innovation, developing and using specific non-standard tools and whole mechanisms that contribute to increasing the efficiency of the implementation of the supported innovative project”.

The goals defined by innovators and investors in attracting outsourcing to support innovative solutions may include:

– reduction of the risk component;

– cost reduction;

– solution of both standard and non-standard tasks necessary for the implementation of the project;

– obtaining the greatest economic, technological, organizational and managerial returns from the results of the project implementation.

In the latter case, it becomes possible to obtain not only the planned result of an innovative solution but also, through the use of non-standard approaches, embedded in the very nature of outsourcing activities, to achieve a higher effect from its implementation. The result of the combined innovation activity of the source of innovation and the outsourcer can provide additional reinforcement of the innovation effect both in the process of introducing innovation and its diffusion in the market

The system of commercial support for innovative projects can be implemented in various forms: investment, research, technical and technological, organizational and management, infrastructure and so on.

Outsourcing activities, at first glance, refers exclusively to the infrastructure-providing form. However, if we take into consideration the comprehensive focus of innovative outsourcing, the latter often acts as a link between the various components of the commercial support of innovation.

Outsourcing can be used both at the individual stages of the implementation of the innovation, and in the full technological cycle.

However, the involvement of the outsourcer in the processes of innovation development may lead to the need to solve the problem of correlation of copyrights to innovative solutions, distribution of profits from the results of implementation and subsequent diffusion of the project and so on. These issues must be legally resolved before the start of cooperation between the outsourcer and the customer.

Innovative outsourcing as a form of activity must meet the following basic criteria:

– orientation to non-standard approaches when solving both template and non-traditional tasks;

– generating additional profit of innovations through the development of new technological chains, optimization models, and so on;

– ensuring not only secondary but also the main business processes of the customer;

– infrastructure support of a wide range of tasks during the implementation of the project;

– strict observance of trade secrets of innovative solutions;

– the flexibility of its own technological and organizational-managerial processes that can quickly adapt to market changes in market tasks and specific projects;

– ensuring high efficiency of the functioning of the internal structure of outsourcing activities in both internal and external environments;

– organization of an effective partnership interaction system based on the formation of a team work ideology taking into account the psychological characteristics of both employees and contractors.

The development of the innovation sphere of the economy poses challenges for a new scientific and theoretical understanding of innovative outsourcing and the transformation of practical approaches to its implementation. However, the establishment of innovative outsourcing is faced with a number of constraining factors, the successful development of which depends on the speed and effectiveness of its development, as well as the depth of diffusion into various areas of economic activity.