Outsourcing is dead; long live Multisourcing

At her recent presentation at the Symposium ITxpo, Gartner analyst Linda Cohen officially announced the death of outsourcing:

You have to stop outsourcing now! Research suggests that 50 percent of outsourcing contracts signed during the last three years will fail to meet expectations.

The reason for the failure of outsourcing seems obvious, if you ask Cohen: most organizations are utilizing ad-hoc approaches to outsourcing that are both short-sighted and ineffective. Corporations go offshore because investors like the concepts of outsourcing. Too often, the teams that end up managing multiple contracts lack the experience and the governance discipline to complete the projects successfully.

Linda Cohen and Allie Young have published a book on the subject, Multisourcing: Moving beyond Outsourcing to Achieve Growth and Agility. The book identifies eight myths of outsourcing, I'll highlight three:

1. The enemy: Thinking of the service provider as an enemy to defeat in contract negotiations.
2. Procurement: The notion that best price is the key metric, discounting other important factors.
3. Sourcing competency: Believing that the required management capabilities necessary to manage external services exist in house.

The multisourcing model, on the other hand, "seamlessly blends internally and externally delivered services not just to cut costs or gain efficiencies, but to maximize growth, agility, and bottom-line results."

The book is definitely not the be-all end-all of sourcing books. Ironically, most of the advice inside is taken from recent outsourcing books, some reviewers say. If you don’t have ANY books on outsourcing though, you could as well start with that one.

AUTHOR: Krasimir Koichev, iConcertina Creative

Comments

[limont]

You seem to want to praise "multisourcing" using nothing more than creative writing skills i.e. fancy consultancy speak.

In essence I agree that outsourcing simply for outsourcings sake is a mistake and many complex factors contribute to the success of any such initiative, but to reskin "bad outsourcing practise" as an entirely new concept is something I find somewhat cowardly...........dont give outsourcing a bad name by creating a "new" process that is essentialy "outsourcing done right!"

[Krasimir Koichev]

Hi Limont,

Thanks for praising my creative writing skills - it's been a long time since anyone mentioned that.

In my post, I've tried to give the floor to the authors of the book. The views expressed about multisourcing are mostly that of the authors.

As I mentioned in the last paragraph, there are critics of the book who say it's nothing more than putting a new name to certain outsourcing practices.

Personally, I think outsourcing is definitely a way to improve the bottomline (cutting costs, improving quality of service, or both). The focus shouldn't be on whether we do it or not, but how we can improve the overall process.

As far as this book provides some insight into that process, I'd recommend it.