Part of my daily role as CEO at Savid Technologies iss to work with Small and Medium businesses and one of the quesiton I commonly get is about outsourcing. How can we outsource effectively? Or, what else can we outsource in addition to IT, etc so I thought I would give a small primer on multiple vendor outsourcing.
Now, as businesses grow, their vendor management process also increases in sophistication, and some company’s tend to transition from using a single outsource provider for application development to using multiple vendors. This multisourcing approach utilizes different vendors who specialize in different areas of application development and testing.
While I often hear relentless praising for the multisourcing approach, we should not forget that it does come with its own set of trade-offs and potential problems. Here I will examine the pros and cons of multisourcing:
+ Gain access to experts in their particular discipline. The most obvious advantage is the ability for you to leverage the expertise of vendors specializing in different disciplines. For example, you may use a vendor specializing in development and another specializing in testing. By using multiple vendors providing their unique expertise, you gain access to a wider pool of knowledge and skill than you would when only using a single vendor.
+ Save Money. Using specialized outsource providers means tapping into a smaller market with lower costs and less turnover than larger providers. A small, specialized firm can offer more expertise at a single discipline and for at less cost.
+ Higher quality assurance. The division of outsource providers establishes an independence between the different disciplines that should yield a higher quality result. For example, a testing vendor can provide honest insight about the developed software’s quality since they were not responsible for developing it. In this way, multisourcing creates a system of checks and balances that promote quality and lower risk of problems.
Now before you run to reassess your vendor management structure with multisourcing capabilities, you’d better first keep in mind these possible negatives:
- Increased vendor management. Onshore employees will have to manage, organize, and coordinate the output of the multiple outsource providers. Without a single outsourcer providing a turn-key solution, your company will have to use its own time and resources to manage the project each step of the way.
- Multiple vendor relationships. With the additional expertise of multiple outsource providers comes the management of additional vendor relationships. Communications suffer without a single point of contact, making it more difficult and time-consuming to on your end to manage and maintain vendor relationships.
As it goes with everything in the IT world, whether single-sourcing or multi-sourcing is right for your company depends on a set of individual circumstances, including the size and scope of needs of the company. It’s up to you to consider the pros and cons of each vendor management structure and be aware that there is no magic bullet solution.
Tagged vendor management