Does Outsourcing Retard Innovation?

Steve,

What would your reaction be if I were to say that since automobile companies need a lot of steel and rubber, they should also invest in steel and rubber industries. Sounds unacceptable right?

Stifling of innovation in conceptualising and creating the correct IT infrastructure (applications, platforms, hardware) to deliver innovative and appropriate business services is probably a reality. But to blame that on outsourcing is taking it a little too far. May be your next posting should explain the context and terms of reference for what Mr.Suh was alluding to

Constraints force people to innovate. Today's enterprises are too heavily focused on cost cutting to play nicely to investors.

And, outsourcing based on 'cost' alone will definitely stifle innovation, as enterprises are trying to totally avoid constraints. For that matter any decision just to cut costs will stifle innovation.

Constraints are nothing new. Enterprises should learn to innovate instead of avoid constraints. Then, outsourcing will mean to get best minds aboard. Until then, outsourcing doesn't make any sense to most.

Despite big marketing efforts by IBM et. al to the contrary, the level of innovation actually brought to bear by IT outsourcers continues to be a big disappointment to most corporate IT leaders. We've been covering this issue for some time at CIO magazine/CIO.com:

What Does It Take to Get IT Outsourcers to Innovate?
IT leaders say they want outsourcing providers to go beyond traditional services. And the providers want to market themselves as partners in innovation. So why isn't it happening?
http://www.cio.com/article/144400

Outsourcing's Innovation Crisis:
http://advice.cio.com/stephanie_overby/outsourcings_innovation_crisis_0