Sole Source Outsourcing

An Executive Viewpoint

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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.

Peter Bendor-Samuel
Founder & CEO
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