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 by downloading this one.

Note: Originally posted at SmartApps

multisourcing, outsourcing, smartapps