Innovation in Outsourcing—An Empirical Analysis of Outsourcing Vendors’ Innovation Approaches

Companies must drive innovation to stay competitive in today’s fast-changing and highly competitive environment. Therefore, they do also involve their outsourcing vendors as strategic partner for innovation. While recently at least some studies have examined innovation-oriented outsourcing partnerships and their outcomes, almost no research has yet focused on the innovation-related actions from an outsourcing vendor’s perspective. Our paper explores what kind of initiatives outsourcing vendors implement to create innovation for their customers. It analyzes a unique dataset of more than 830 innovation initiatives, as reported by global outsourcing vendor firms. The analysis identifies 22 different types of innovation initiatives, which are clustered into six different dimensions. Using these results plus nine interviews with outsourcing experts, we have developed a categorization model which allows for categorizing innovation-related vendor initiatives and provides a basis for evaluating the strategic importance of each category for firms searching for or evaluating an outsourcing vendor.