Move Over Sole-Sourcing, It's Time for Multi-Sourcing!

Outsourcing as we know today may not exist for too long in the near future. As least that’s how many industry watchers perceive it. The currently prevalent practice of sole-sourcing is fast evolving into what is called “multi-sourcing”, where organizations hire multiple vendors for different sets of outsourced services.

Though currently organizations are only experimenting with non-critical business processes such as security management, helpdesk management, and production database support, the manifestation of this metamorphosis is already visible around the globe.

IT Research firm Gartner has predicted that by 2009, many tier-I organizations will apply a multi-sourcing discipline to all of their sourcing arrangements. This Gartner view was validated by several vendors including Accenture and TCS, at the recently held NASSCOM gathering.

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One of the more obvious benefits of having a multi-sourcing environment is that customers can lessen the risk of putting all their eggs in one basket.

“When a company enters in sourcing agreement with a single outsourcing provider, it faces far greater strategic risks as opposed to when it signs up with multiple vendors. Rather than relying on one vendor for all its needs, multi-sourcing can allow companies to disperse their risks around and manage them with higher degree of control. In addition to this a multi-sourcing arrangement also enables the client organization to be more nimble and respond to market developments at a quicker pace,” said N Chandrasekaran, executive vice president & head global operations, TCS

In addition to this, customers can hold service providers accountable for the failure or for delivering less than acceptable quality of service in a multi-sourcing arrangement more easily than when in a single sourcing tie-up.

According to Sandeep Arora, Lead, Accenture Delivery Centre for Technology, “This is a model that is likely to affect a new era in the outsourcing industry. The probability of the success of multi-sourcing lies mainly in the transparency it is going to bring about as far identifying the best outsourcing options are concerned. Large, single-sourced arrangements often tend to lack the clarity which in most cases causes a less than satisfactory end performance.”

However, in order to fully reap the benefits of multi-sourcing, companies will have to adopt a cautious approach and fashion a clear-cut strategy that will be linked to their overall business strategy.

“You will have to have an enterprise-wide system which will constantly asses every contract and monitor the service delivery of each of those contracts. In addition to having a stringent sourcing strategy, organization will have to employ strict sourcing management in a multi-sourced vendor environment,” said Byron C. Vielehr, chief information officer, D&B.