Multi-sourcing: Keeping your business partnerships spinning?

I’ve often thought that entering into a business partnership is a lot like spinning plates on a stick; it requires a great deal of attention, a sure touch and a great deal of awareness.Recent changes in the way contracts are sourced means...

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I’ve often thought that entering into a business partnership is a lot like spinning plates on a stick; it requires a great deal of attention, a sure touch and a great deal of awareness.

Recent changes in the way contracts are sourced means that, in outsourcing terms, this is a task that’s become either much more difficult, or far more simplified in recent years, depending on what sort of organisation you are.

An example is the sharp decline in the number of single source ‘mega deals’ signed in recent years. It’s an inevitable and understandable consequence of the global financial crisis, which has seen considerable belt-tightening, and one which has, together with the government’s £100 million contract cap, made multi-sourcing an increasingly attractive option for those looking to outsource.

Indeed, blue chip organisations have even started purchasing companies who can further diversify their offering to enable them to gain a share of the multi-sourcing pie.

For the uninitiated, multi-sourcing is the process of outsourcing to multiple service providers instead of one. Organisations have found that they can find significant cost efficiencies by distributing application development and maintenance work among more than one service provider to carry out work for them, instead of relying on a single provider.

Under this model, each business function can be treated as a separate portfolio of activities, with peripheral tasks outsourced to multiple service providers.

So why has multi-sourcing proved so popular in these troubled economic times? It’s clear that multi-sourcing allows organisations access to a much wider range of resources as well as a much deeper set of skills than would have been possible from a single service provider.

Equally, it’s true that when outsourced work is divided among several service providers, there is often increased competition to deliver results amongst suppliers, with the knock-on effect that the quality of work is increased.

However, as much as multi-sourcing provides a range of benefits for business owners, it’s important to recognise that it’s not the answer for everyone. Having a large number of different service providers requires a very high level of governance and management - after all, you’re not just coordinating with one single company, but many.

Multi-sourcing means that organisations need to keep many different plates spinning at the same time - not just one - and ensure that none of them fall crashing to the ground. This can bring its own pressures and problems, which some organisations are not equipped to handle.

When all’s said and done, it’s important to remember that multi-sourcing is not a solution that will suit everyone. Before taking the plunge, examine how your organisation is structured, and whether or not it would benefit from taking this approach - or whether it would only make matters more complicated.

If your company is able to manage a number of different relationships, then multi-sourcing could be the answer. If not, you could end up surrounded by a lot of broken crockery!