By 2023, the market for research and development (R&D) outsourcing is expected to increase at a compound annual growth rate (CAGR) of more than 8%. This is not surprising considering the ever-more complex products and solutions, the head-spinning pace of technological development, and the resulting need for more diverse expertise.
The question now is: Can you outsource innovation? To make innovation outsourcing work for your business, you must do it correctly. This little guide should provide you with some useful pointers.
What Is Outsourcing Innovation?
Innovation outsourcing is a business approach in which a corporation outsources the generation of new product ideas, the development of market entry strategies for these products, or both, to external service providers.
In that sense, innovation outsourcing extends beyond the outsourcing of one-off projects, core services, operations, or peripheral activities. Management, innovation, strategic research, know-how, and intellectual capital are all being outsourced here, which means the stakes are considerably higher.
Why do businesses outsource their innovation management functions?
While the risks associated with innovation outsourcing are substantial, so are the potential rewards. Strategic outsourcing, according to a study published in the MIT Sloan Management Review, can help businesses reduce innovation costs by 60 to 90 percent, shorten product cycle times, and generate ROIs of up to hundreds of times the initial investment.
Advantages of Outsourcing Innovation
Access to Global Talents
One of the benefits of this outsourcing model is that it enables you to collaborate with specialists in specific fields. Additionally, they have the industry experience, skillset, and level of competence that you require, ranging from junior members and team leads to senior executives.
Accelerated Time to Market
The additional resources and hands can accelerate the development process from the start, resulting in a shorter time to market and a significant competitive advantage.
Flexibility and Scalability
Strategic outsourcing enables you to seamlessly scale up or down your external team as your project evolves. This provides greater flexibility than hiring management-level professionals in-house and mitigates long-term financial concerns.
An Advanced Tech Process
The success of any technology project, particularly one focused on innovation, is contingent upon properly establishing a broad range of processes from the start. This comprises not just technical aspects (testing, DevOps, and so on), but also communication, team organization, and operations.
Outsourcing innovation eliminates the need to do everything in-house (and subject your team to a lengthy and potentially costly learning curve with an uncertain outcome). Rather than that, you can rely on your outsourcing partner, who has built, tested, and authorized the processes necessary to deliver the specific type of product you demand, as well as knowledge transfer to your in-house team if necessary.
Curious What Innovation Outsourcing Can Do for Your Business?
Whether you want to modernize legacy software and replace it with bespoke modern apps, collaborate with a winning outsourced software development team, experience world-class technology consulting services, we can help you build a successful outsourcing strategy. Look into Third Wave Outsourcing to help you harness the benefits of outsourcing innovation.