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Multi-Sourcing is Taking the Place of Mega IT Contracts

Sep 8, 2008
There has been a recent trend within the global sourcing industry. Mega IT contracts are no longer dominating the industry. More and more outsourcers are moving away from large IT contracts and instead are outsourcing to more than one vendor. This type of outsourcing is known as multi-sourcing and its purpose is to help to reduce the risks associated with using one global sourcing provider. In the past, numerous outsourcers have been negatively impacted when using only one vendor for a variety of reasons, which frequently included knowledge and technology dependency, long-term contracts and failure to perform as agreed. Multi-sourcing avoids these potential problems, which is why it is gaining in popularity.

When an outsourcing company uses only one global sourcing provider, the relationship can become difficult to sever. Business knowledge tends to reside with the developer and if the vendor holds the majority of this knowledge, the outsourcing company is at a disadvantage. Multi-sourcing allows an outsourcer to send IT projects to various vendors, while avoiding dependency on these firms.

Even though all of the project specifications may be outlined in detail, a vendor may still fail to complete the IT project. If a company is already in the practice of multi-sourcing, it can easily transfer the work to another vendor. Some time will be lost, but the overall impact will be minimized by having an existing relationship with a different global sourcing provider.

It is rare to find a vendor that can successfully handle a wide range of tasks, such as networking, business processes and application development. Multi-sourcing gives the outsourcing company the ability to use the resources and expertise of various vendors. Not every global sourcing provider will have the same capabilities, but each provider can be used for a specific process or function.

Outsourcing contracts are usually anywhere from five to fifteen years. For an outsourcer who is new to global sourcing, this long term contract can be intimidating. A lot of faith is placed on that particular vendor's capabilities and aptitude to perform as agreed. Many outsourcing companies are avoiding lengthy contracts and are now signing short term agreements with various global sourcing providers.

Multi-sourcing is a great option for veteran outsourcers and companies looking to outsource for the first time. As outsourcing deals begin to shrink in size, the risks related to global sourcing to one vendor should also begin to go down.
About the Author
A&E Consulting is a full service consulting firm that has been successfully helping clients with their global needs. Visit http://www.globalsourceyourit.com or call 818-572-8399 for more information.
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