IT Innovation and Outsourcing

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Cost pressures have forced companies to ‘outsource’ a variety of IT services. How much information technology (IT) to outsource depends on which industry you are in and to what extent IT plays a part in your end product or service. I will use several sources to describe the balance between IT innovation and outsourcing relative to the Life Sciences and Healthcare industry. I came from a background in software delivery and now I am active in IT services and solutions. Many of our clients have to balance this decision, and surprisingly there are advantages to outsourcing as it focuses an organization on IT innovation in support of the business goals.

Focus on IT Innovation

I came across article Harvard Business Review (August 2, 2010 by Susan Cramm) which posed the statement: “with extensive outsourcing, over time, companies lose the ability to innovate IT.” The question is if an organization outsources many of its developmental projects how can these companies attract, develop, and keep IT smart leaders. The example used came from the banking industry where large-scale outsourcing limited that company’s ability to innovate IT. It seems to me that given the changes in technology and the impact of improving healthcare there should be a conscious effort to balance outsourcing and concentrate on IT innovations. The Harvard Business Review article points to the loss in jobs due to excessive outsourcing, yet within the Life Sciences industry it is IT innovations that will propel the advances we seek in healthcare.

Another driver in all this is the ability to create ‘value.’ In the article on “Six Fundamental Shifts in the Way We Work” competition has intensified and that the new centers of innovation are in China and India. So it seems to me that we need more of a balance, or as the article points out, a “collaboration curve” between outsourcing and IT innovation within Life Sciences and Healthcare. It is not that the US has lost its edge. We are still a nation of ideas and creativity. Outsourcing is one of those ‘shifts’ that we can use to our advantage. This drives the focus of our jobs and assignments to create ‘value’ by way of IT innovation. For example in a past posting I described the use of PDAs for doctors and nurses leading to IT efficiencies that improve healthcare. As the outsourcing vendor we provided off-shore development resources. Collaborating with our client we worked on all aspects of the design, prototyping, testing and delivery.

Outsourcing provides a means for Life Sciences companies to lower their operating costs. In the article on “Pharma contractors hiring fastest in sector” (August 17, 2010 by Tracy Staton) it describes how Pharmaceutical services and outsourcing firms are hiring (as high as 5 times as fast as drug companies themselves). The article goes on to describe the business reasons for going this route as oppose to full-time employees. We need to be aware that this shift to outsourcing has an effect on the current workforce. Which is why I felt compelled to post this blog. I cannot speak for some of the other industries, yet within Life Sciences outsourcing will remain a key driver for controlling costs. Where does this put you? Can you see yourself being the one directing new IT innovations with off-shore resources? How are you ready for this ‘shift’ in IT?

Thanks,
Jim

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