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Friday, January 16, 2009

Multi-sourcing: A Risk Reduction Strategy

Posted by rommel olido on October 30, 2008

A particular business is considered successful when its performance is always consistent. Although, outsourcing provides advantages that lift up business performance, there are still many risks that will create potential concerns. Engaging with only one outsource service provider for example, has made some businesses loose their edge over their competitors. Because most companies who engage in outsourcing are dependent on the knowledge and technology of their service provider (vendor), they expect their business needs addressed, but unfortunately, some service providers fail to perform what was agreed. Another concern is, when a company uses only one service provider, the relationship can turn out to be difficult. Business knowledge tends to reside with the developer and if the vendor holds the majority of this knowledge, the company is at a disadvantage.

To avoid those problems in outsourcing, an innovation has evolved in this industry. Appearing to have similar purposes with outsourcing, multi-sourcing has very different objectives. Most outsourcing companies are moving away from large IT contracts and instead outsource from more than one vendor. A vendor that can successfully handle a wide range of tasks, such as networking, business processes and application development is very hard to find. Through multi-sourcing, a particular company can use the resources and expertise of various vendors. A company can be open to more options for a specific process and function when this strategy for business is applied.

Multi-sourcing is indeed offering a new strategy for experienced outsourcers and companies looking to outsource for the first time. As outsourcing deals begin to diminish in size, the risks related to global sourcing from a single vendor should also begin to reduce.

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