The choice between single, multi-sourcing and managed service partners


Business process outsourcing (BPO) often provides companies with the opportunity to drive cost savings and enable their in-house team to focus on core business processes. This involves outsourcing non-core or non-strategic functions, including accounting, customer service and human resources.

However, where do companies start with finding the right solution? How do companies choose between engaging a single supplier, multiple or working with a managed service provider? In this article, we’ll explore these different models and how they work.


Single supplier

Engaging a single supplier involves outsourcing a specific business process or function to a single service provider. This can provide the company with a series of benefits, including:

However, there could be some challenges associated with this model, including:

Multiple suppliers 

Engaging in multi-sourcing involves dividing the outsourcing of various business processes among multiple service providers. Instead of relying on a single supplier, the company may contract with different suppliers for different tasks or even different geographic regions. The benefits of doing so, include:

However, it can pose certain challenges for the organisation looking to outsource, including:

The potential solution: a managed services partnership

A growing trend in the sector has been an increasing reliance on managed services partners (MSP). This refers to strategic collaborations between the company and an external service provider to deliver specific outsourced business processes. The MSP, also known as a prime contractor, would build an eco-system of suppliers on the company’s behalf and potentially even have oversight of these suppliers in a managed services model, while the company retains oversight and maintains control over the overall business direction and outcomes. Managed services partnerships are becoming a more common arrangement in the BPO industry and offer several benefits, including the ability to scale quickly and meet surges in demand. In a report released recently by PwC, managed services partnerships are no longer solely being viewed as a means to lower costs, but as a means to drive innovation, speed and competitive agility. They note that the highest performing companies are those who use MSPs strategically, rather than focusing on cost alone.

Here’s an overview of how managed service partnerships work and their advantages:

The advantages of managed service partnerships for the buying organisation include:

The advantages for suppliers when entering into a managed service partnership:

How to choose the best outsourcing solution

When starting the journey with outsourcing, the chosen model will very much depend on the individual company and their requirements. Some companies may decide to adopt a hybrid approach between single and multi-sourcing, whereby they may single-source certain critical or highly specialised functions, while multi-sourcing less critical or more standardised tasks to gain the advantages of competition and risk diversification. Alternatively, managed service partnerships can provide companies with the ability to leverage the expertise and resources of an external partner while retaining control and oversight over critical business processes. As noted by PwC, the use of MSPs and outsourcing solutions are shifting to be about more than just cost. By collaborating in this way, companies can achieve strategic advantage, operational excellence, and better business outcomes.

At tkg, we’re experts in connecting buyers with suppliers – whether that is supporting an organisation to source a single supplier or build out and manage an eco-system of suppliers on an organisation’s behalf. Get in touch with us today if you’re interested in finding out more.

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