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Is multi-sourcing the answer to all sourcing issues?

Rather than using a one-size-fits-all approach, a growing number of businesses are breaking up larger outsourcing contracts into smaller pieces and employing the services of a number of suppliers to carry out particular tasks.

However, rather than this being a complete operational solution, there is a view that multi-sourcing could come with its own set of problems and issues to tackle. Jaroslaw Czaja, chief executive of Polish software developer Future Processing, explained that the trend of multi-sourcing should best suit those companies that are offering niche and bespoke services.

He suggested it is not a 'quick-fix' answer for all outsourcing needs as it requires the company and suppliers to communicate continually and conduct a two-way consultancy relationship. Forrester Research Inc is more enthusiastic: "An effective multisourcing strategy needs robust service integration between suppliers. Get it right and stakeholders delight as IT service delivery is flexible to demand," said Forrester's Euan Davis.

However, Jonathan Cooper-Bagnall, head of sourcing at PA Consulting, told the Financial Times that the idea that this way of working is 'a panacea … is simply not true'.

"Companies could not manage it with one and now they are going to break it up and manage it in a more complex environment," he said.

The FT noted that the lack of management expertise can prove to be one of the biggest problems of multi-sourcing, and figures from PA Consulting Group reveal 84 per cent of firms have no mature governance model for their outsourced services. Graham Beck, a sourcing expert at PA Consulting Group, warned there are hidden costs risks, as many businesses lack the in-house resources to manage multiple outsourcing relationships.

"The logic gets unstuck when you disaggregate into a number of constituent parts, the client needs to integrate them all together," said Beck.

To find out how PA can help you build an effective multisourcing strategy, please contact us now.

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