How do you differentiate between smartsourcing as a process and the benefits from outsourcing?
When we raise the specter of work mobility, the first thing that most people think of is outsourcing. Smartsourcing is not synonymous with outsourcing. Outsourcing is only one part of smartsourcing. Outsourcing is meant primarily to reduce costs and transfer the risks of a defined process to a third party. I have found that 61% of all organizations that undertook an outsourcing initiative did so, initially, for only cost objectives. The term I use for this sort of outsourcing is “lift and shift,” meaning an existing process is lifted out of its current organization and shifted over to the third party. The third party may achieve economies of scope through shared services, technology or international wage arbitrage, but such a relationship will rarely lead to higher levels of innovation. This innovation deficit in current outsourcing relationships represents a huge opportunity lost. I believe that this is one of the most limiting factors in the acceptance of outsourcing and offshoring.
