Many large enterprises over the years find themselves with mulitple IT outsourcing partners who were brought on board at different points in time for different pieces of work. Some times, it is a collated view of opportunistic out-tasking where the cheapest bidder gets small chunks of work till it emerges that the total cost of managing several contracts and service providers, outweighs the benefit of lower cost in siloed contracts.
Among large companies with substantial growth and those with multi-national business spread, it soon becomes apparent that having fewer partners incentivizes them to bring greater value not just with cost but with the quality of work. Clearly, if a customer contributed $5m of revenue, the focus woud be differnt from what it would be if the customer contributed $100m of revenue. It would get greater senior executive review and the outsourcing company would go further to ensure these revenue streams are protected and grow through a partnership.
This, in a free market situation, also acts as an entry barrier for smaller IT outsourcing players ( and actually in any industry with vendor consolidation). .That is why most large companies mature to outsource to few and large IT outsourcing providers only.
In fact, looking at the state of vendor split, size, number of outsourcing providers for an enterprise can actually also reflect on the relative maturity of these organizations in the outsourcing space. Each company has its own journey, driven by its strategy to outsource and its size.
Among large companies with substantial growth and those with multi-national business spread, it soon becomes apparent that having fewer partners incentivizes them to bring greater value not just with cost but with the quality of work. Clearly, if a customer contributed $5m of revenue, the focus woud be differnt from what it would be if the customer contributed $100m of revenue. It would get greater senior executive review and the outsourcing company would go further to ensure these revenue streams are protected and grow through a partnership.
This, in a free market situation, also acts as an entry barrier for smaller IT outsourcing players ( and actually in any industry with vendor consolidation). .That is why most large companies mature to outsource to few and large IT outsourcing providers only.
In fact, looking at the state of vendor split, size, number of outsourcing providers for an enterprise can actually also reflect on the relative maturity of these organizations in the outsourcing space. Each company has its own journey, driven by its strategy to outsource and its size.
No comments:
Post a Comment