Out sourcing gives way to multi sourcing
The global outsourcing scenario is changing fast. Many leading enterprises are moving away from multi year mega contracts to single vendors. They are trying out a new variant of outsourcing called multi sourcing. Multi sourcing involves allocating separate IT functions to multiple vendors. Growing disenchantment with traditional outsourcing is due to its failure to deliver innovations or significant service improvements as expected. The tilt in favour of multi sourcing is mainly on account of 'best in breed' effect that it offers. Placing all the eggs in a 'large contract to single vendor' basket is no longer considered prudent. The obvious advantage of sharing the pie among several vendors is a huge reduction in operational risks.
The multiple benefits of multi sourcing can be summarised as follows:
Fosters competition among vendors. The buyers are able to negotiate price and service levels to their best advantage.
It supports a mix and match approach. The client can achieve 'best of breed' solutions through allocation of different tasks to different suppliers based on their relative merit and expertise in the field. In this way, the highest quality of services in the market can be tapped.
Risk is spread across a number of vendors. No longer is a business dependent solely on the performance of a single vendor. The process of removing a failing vendor is far more easier.
The best practices adopted by each vendor can be shared among all the other vendors to improve overall performance levels.
However, multi sourcing is not with out challenges. Managing multiple vendors is much more complex than dealing with a single vendor. It requires a wide variety of services to be demarcated, tracked and measured while retaining a holistic view of the company’s IT infrastructure, goals and objectives. Experts suggest that creation of an outsourcing strategy linked to overall business goals is important. In order to reap the benefits of working with experts, diversifying risks and garnering cost savings the companies must manage their multiple vendors well.
Some of the best practices adopted by global enterprises while managing multiple vendors are:
Establish an outsourcing governance team with special skill sets and experience to choose the best vendors and chart out a suitable multi sourcing strategy.
Develop a holistic view of all the providers and their relationship with each other. Set up a metric based mechanism to coordinate the efforts of multiple vendors.
Ensure accountability among vendors by establishing rules that demarcate responsibilities between vendors, define interaction for service delivery; provide incentives for adherence and penalties for non-compliance.
Use collaboration tools, meetings and forums across all the providers so that they can communicate with each other and the client.
Select one of the providers as a leader to facilitate coordination among all the members of the multi sourcing set up or partner with an outsourcing deal manager to maximise the business value derived from multi sourcing.
The Indian BPO industry too is welcoming the trend with open arms, for it has given scope for many small players to enter the fray. Many of these players were hitherto incapable of handling the diverse nature of work required by the major contracts comprising wide spectrum of knowledge and expertise. Multi sourcing has given them an opportunity to reach out for a slice of the pie in their niche areas.
This is a win-win situation for both the customers and suppliers of core competency services.
N. PURNIMA SRIKRISHNA
faqs@cnkonline.com
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