Multi-sourcing: Moving beyond Outsourcing

The Problems with Traditional Outsourcing

Traditional outsourcing is struggling, since it has not been able to deliver any substantial improvements in services or innovate satisfactorily. It is not that outsourcing has been a complete failure. It's just that it has not been able to perform as expected. And that has started hurting companies.

The Solution

The solution has come in the form of a modified form of Outsourcing, that is, multi-sourcing. Multi-sourcing involves using multiple suppliers, it helps avoid a scenario where a single supplier becomes indispensable, and the organization has to work with it on every project, regardless of the fact whether they are specialized in all the functions or not. In the case of multi-sourcing a CIO selects, and deploys the best provider for individual projects. The foremost benefit is that one can have the best possible people working on individual projects, services or functions. Since multi-sourcing removes reliance on a single provider, replacing a provider who is not performing well becomes relatively easier. Multi-sourcing relationships ensure that the business stays in control and the customers are able to negotiate prices from a stronger position as well demand higher quality.

Getting better at Multi-sourcing:

To ensure that one's multi-sourcing efforts are successful, one has to keep a number of things in mind, to begin with,
 The company that is seeking to multi-source should develop an outsourcing strategy that is in sync with the overall business strategy.
 Ensure that all services have an integrated sourcing strategy. The outsourcing team should possess specific skills according to the requirements of various projects.
 In traditional outsourcing, contracts where signed with the providers and then they were left to deal with the projects handed over to them. Multi-sourcing is different because to ensure success, one has to focus on building relationships.
 The providers/suppliers should gather an in-depth understanding of the client's business. Customer service should be given prime importance. This is because in a multi-sourcing scenario the client is able to compare the services of different providers. So faltering in customer service or understanding of the customer's business could immediately lead to the loss of contract. Providers should also try to develop relationships at different levels of their customers' business rather being satisfied with a single point of contact. This would benefit both the parties. It would help the provider sell more services and the client would be able to use the provider's potential to the maximum levels.
 Companies should use multi-sourcing, not only to solve any given problem or take care of certain mechanical functions. They should also use it for making major improvements in service and other business benefits.