Executive Viewpoints | Sole-Source Outsourcing - Ensuring a Successful Outcome

16 Aug 2018
by Peter Bendor-Samuel
As companies look for ways to streamline the outsourcing process, a range of reasons may make sole sourcing a viable, cost- and time-saving option – if applied wisely.

Sole sourcing is the practice of working with a single service provider to define, negotiate, and purchase services. Traditionally, buyers employed sole sourcing to deliver a simplified, faster service acquisition process, with fewer of the difficulties of staging and reviewing a multi-provider process. Today, the use of sole sourcing is most often a function of the trust that exists between a buyer and service provider. As buyers of outsourcing services look to limit the proliferation of service providers with whom they maintain relationships, the sole-source option is becoming increasingly relevant.

Sole sourcing can deliver significant potential efficiencies over multi-provider outsourcing efforts in terms of cost for completing the process and time required to make a decision. However, a sole-source approach is susceptible to stakeholder challenges that should be addressed early on to ensure a successful outcome. Doing so increases the chance that the initiative will suit the buyer’s and service provider’s objectives – today and in the future.

The key is for the buyer to take responsibility for making the sole-source approach disciplined and rigorous. The necessary components of this include:
-Defining carefully the buyer’s objectives and the services required
-Establishing a framework (financial and other factors) that helps both parties know when the proposed solution is acceptable
-Laying the foundation for the two organizations to productively govern the implementation and ongoing execution of the solution

By establishing such a process, the buyer provides a level of tension that drives the process to produce increased performance from both the service provider’s and buyer’s organizations, while also forging a productive working relationship with the service provider.

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