Global Multisourcing Strategy: The Emergence of a Supplier Portfolio in Services Offshoring

Abstract

In today's global services outsourcing arena, increasing numbers of companies adopt "multisourcing," that is, they select and combine information technology (IT) and business services from multiple providers. The literature on IT outsourcing and supply chain management has identified critical tradeoffs involved in increasing the number of suppliers and has strongly recommended focusing on a handful of strategic partners to balance these tradeoffs. Committing to a few strategic partners, however, may prevent a firm from discovering new suppliers, or even supply regions. Such missed opportunities may be particularly limiting in the context of offshoring professional services, which has exhibited rapid changes in supplier markets in the last decade. Thus, firms may want to engage in a more intensive multisourcing in services. If they do so, their success will depend on a global sourcing process that effectively addresses the critical tradeoffs involved. To explore how a global sourcing process can support multisourcing, we conducted a qualitative longitudinal case study of a large financial services institution that developed a varied global supply base to obtain offshore professional services. Our analysis results in a theory that emphasizes (i) advantages of a multiple provider strategy in rapidly changing global supply markets; (ii) the critical role of middle managers in enabling continuous innovation in the supplier structure; and (iii) the importance of the global sourcing process combining top-down and bottom-up decision making in multisourcing.

The role of project portfolio management in fostering both deliberate and emergent strategy

“…Emergent strategies are realized in absence of or despite formal strategic intention and by nature fall outside traditional strategy processes; this makes it difficult to control their influence and has prompted exploration of alternate methods to manage 'planned emergence' (Grant, 2003;Levina and Su, 2008). This study explores how strategic control mechanisms implemented at the portfolio level can influence organizational performance by not only measuring performance, but also providing impetus and direction for change and emergence in strategic processes (Bititci et al, 2012;Thomas and Ambrosini, 2015).…”

Information systems offshore outsourcing: managerial conclusions from academic research

“…41% of the articles take as their object of analysis the company or organization as a whole (e.g. Levina and Su 2008), but a considerable number of them mainly examine offshore projects (27 articles -i.e. 30%-among which is the paper by Gopal and Sivaramakrishnan 2008).…”

“…Offshore Typology receives the attention of nine articles. Under this topic are comprised the works which treat the different typologies of outsourced services, namely: opensource, that is, the development of open source software within a global community (Agerfalk and Fitzgerald 2008) 2 ; nearshore outsourcing, which would represent the most conservative version of offshore because the delivery of the services outsourced comes from a country that is not very far from the client (Carmel and Abbott 2007); offshore with a mediator or mediated offshore model, where a small provider firm offers its services to a larger IT firm that in turn acts as an interface with the onshore clients (Jarvenpaa and Mao 2008); two-stage offshoring, which takes place when the client looks for a provider that is normally close (nearshore) and that, in turn, looks for another cheaper, more distant provider (offshore) (Holmström Olsson et al 2008) and multisourcing, where a client looks for several providers of offshore services (Levina and Su 2008). Eight articles focus on the geographical location where offshore services develop.…”

Analysis of IT Multisourcing Practice in a Telecommunication Company

“…Interestingly, the post-contract management of outsourcing relationships is a cost that several client organizations have also neglected to consider up front (Barthélemy, 2001). Accordingly, IS research has found that management costs rise as managers need to contract, coordinate, and collaborate with multiple providers (Levina & Su 2008). In particular, the former brings trust, an understanding of the client's business (from a vendor perspective), a willingness to share risk and a reduction in client-vendor conflict (Lee 2001, Wüllenweber et al 2008).…”

“…Under a multisourced IT strategy, a client organization can therefore outsource to vendors which have complementary capabilities and provide similar services (Levina & Su 2008). Compare to other sourcing strategies, multisourcing has received only limited attention in especially the information systems literature.…”