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Outsource magazine: thought-leadership and outsourcing strategy | August 2, 2014

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Multi-sourcing: driving the outsourcing industry?

Multi-sourcing: driving the outsourcing industry?
Martyn Hart

Last August I used these pages to spell out the advantages and disadvantages of multi-sourcing in light of changes to the way contracts were being sourced, following the decline in ‘mega-deals’ and the government’s £100 million contract cap.  It seems that the piece was, if I do say so myself, eerily prescient, as in the time that’s passed since then we’ve seen significant changes to the way many organisations have approached outsourcing contracts, with multi-sourcing one of the key drivers. In that time, we’ve seen suppliers making significant strides towards jumping onto the multi-sourcing bandwagon.  But how prepared are the end-users?

Multi-sourcing is, of course, the process of outsourcing to multiple service providers instead of one, and there seems little doubt that suppliers have looked to prepare themselves for what many forecast as a significant drive towards this model. Perhaps one of the key factors behind this has been the government’s decision to open up the procurement process and move their focus away from larger, more established (and expensive) providers. Clearly, the public sector feels, as do those in the private sector, that by using a number of suppliers instead of a larger contract with one supplier they can benefit from the niche, specialised services on offer and gain cost efficiencies.

I don’t think it’s any coincidence that we’re seeing a significant number of aggressive acquisitions from larger organisations which are keen to expand their offerings and global footprint in a number of different markets.  In recent times we’ve seen acquisitions from Capita (which purchased Bristol-based Call Centre Technology), Serco (which has acquired Indian global services provider Intelenet) and CSC (which has agreed to acquire iSOFT), each of which seems aimed at increasing the client base of the respective organisations, and also allowing them to diversify their offerings.

However, if the recent spate of acquisitions really is going to result in a new wave of multi-sourced contracts to replace mega-deals, then perhaps it’s worth asking whether or not end-users are armed with the right level of knowledge to make sure these deals are successful?  After all, managing a number of smaller, niche suppliers can be a very different undertaking to managing one.  Indeed, it can be a real juggling act to ensure that each of your suppliers is meeting your expectations, and requires entirely different management skills.  Deciding to use a system of multi-sourcing is one thing – but do end users have the right skill set to achieve the right results?

If you’d like to hear more about multi-sourcing, and how it could benefit your organisation, then why not come to the EOA Summit in Madrid on 20th and 21st June?  We’ll have a host of guest speakers, all of whom will be available to answer your questions on multi-sourcing and any other aspect of outsourcing you care to mention.  For more details, please contact the EOA team on +44 (0)20 7292 8686 or email: nataliem@noa.co.uk



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