A single-minded focus on direct cost reduction has led many companies to select outsource partners that are really generalists in their fields, basically offering bodies at a discounted rate.  They then task the outsource partner with multiple, interdependent specialized functions. Is it realistic to expect a generalist partner to provide enhanced value, and to do so in multiple independent functions?  Of course not! The best that can be hoped for is average performance, and therein lays the problem.

While cost is obviously an important factor, the overriding goal for any outsource decision must be to achieve enhanced value and an overall competitive advantage through improved return-on-investment, product quality, and time-to-market. The outsource decision moves from tactical to strategic, where it must result in increased value to both the end customer and the business.  The bottom line? An outsource decision is far more complex and important than a lower hourly rate for a resource.

As companies fully understand the strategic nature of outsourcing decisions, it becomes increasingly clear that selecting outsource partners based solely on price is not the best answer. Additional value must be created by improving the way things are done, improving business processes, and this is the domain of specialists, not generalists.   A new paradigm has started to emerge to address this reality and it represents the next generation of outsourcing: multisourcing.

Put simply, multisourcing involves leveraging multiple specialized teams to deliver enhanced value to the enterprise. These teams can be internal or they can be outsource partners. The idea is that a specialized team focusing on a single function (i.e. software testing and verification) can do that function far more efficiently and effectively than a team of generalists. A multisourcing strategy allows companies to break down key organizational requirements into multiple specific functions, and then align specialized teams with those functions that can execute in the most efficient and effective manner possible. How does this differ from a generalist approach and why is it so important? 

• The specialist is much more likely to be abreast of industry trends and best practices in their function, and to have a purpose-built process and operational infrastructure in place to efficiently and effectively execute on those best practices.  
• Specialist teams, focusing in a single function, are likely better-trained, more experienced, and more knowledgeable in that function.
• As teams specialize, project status information timeliness and reliability improves. Why?  The conflict of interest inherent in a single generalist team handling multiple interdependent functions is removed. It is in every team’s interest to point out real and potential issues upstream and downstream in the process.

Companies can either build specialized capability inhouse, OR they can leverage a multisourcing strategy to tap capability without the need to invest in internal infrastructure. In many cases, it makes far

more sense to work with multiple, specialist partners than to try and build all capability inhouse. Trying to do everything inhouse can distract from the company’s core revenue-generation activities, not to mention that finding and hiring good people is expensive and organization building is inherently high-risk in today’s environment. Companies, in general, are leaning more on outsource partners for enabling functions and processes to allow more focus on core revenue-generating business activities and processes and that trend can be expected to accelerate.   

A multisourcing strategy may offer less risk and more predictability and certainty of results

Even five years ago, a multisourcing strategy may not have been possible as true specialist partners didn’t really exist, but this is changing. As the outsourcing market has matured, and as competition among providers has increased, providers have been forced to specialize to gain market share and competitive advantage. A multisourcing strategy leveraging multiple specialist partners now represents a significant opportunity for companies to achieve much more than a better hourly rate for resources. A well 

Put simply, multisourcing involves leveraging multiple specialized teams to deliver enhanced value to the enterprise. These teams can be internal or they can be outsource partners. The idea is that a specialized team focusing on a single function (i.e. software testing and verification) can do that function far more efficiently and effectively than a team of generalists. A multisourcing strategy allows companies to break down key organizational requirements into multiple specific functions, and then align specialized teams with those functions that can execute in the most efficient and effective manner possible. How does this differ from a generalist approach and why is it so important? 

·         The specialist is much more likely to be abreast of industry trends and best practices in their function, and to have a purpose-built process and operational infrastructure in place to efficiently and effectively execute on those best practices.  

·         Specialist teams, focusing in a single function, are likely better-trained, more experienced, and more knowledgeable in that function.

·         As teams specialize, project status information timeliness and reliability improves. Why?  The conflict of interest inherent in a single generalist team handling multiple interdependent functions is removed. It is in every team’s interest to point out real and potential issues upstream and downstream in the process.

Companies can either build specialized capability inhouse, OR they can leverage a multisourcing strategy to tap capability without the need to invest in internal infrastructure. In many cases, it makes far 

more sense to work with multiple, specialist partners than to try and build all capability inhouse. Trying to do everything inhouse can distract from the company’s core revenue-generation activities, not to mention that finding and hiring good people is expensive and organization building is inherently high-risk in today’s environment. Companies, in general, are leaning more on outsource partners for enabling functions and processes to allow more focus on core revenue-generating business activities and processes and that trend can be expected to accelerate.   

A multisourcing strategy may offer less risk and more predictability and certainty of results

Even five years ago, a multisourcing strategy may not have been possible as true specialist partners didn’t really exist, but this is changing. As the outsourcing market has matured, and as competition among providers has increased, providers have been forced to specialize to gain market share and competitive advantage. A multisourcing strategy leveraging multiple specialist partners now represents a significant opportunity for companies to achieve much more than a better hourly rate for resources. A well thought out multisourcing strategy really can offer companies access to enhanced value and an overall competitive advantage through improved ROI, better product quality, decreased time-to-market, and an overall reduction in risk associated with software product development.