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Multisourcing in Software Outsourcing: Should You do it?

Tackling a digital project might have you scrambling to get the perfect software outsourcing company. But what if you don't need to rely on just one vendor for success?
Daniel Zacharias

Djurdjina Milovic

November 8, 2023
Outsourcing software development talent from different sources

Ours is a fast-paced world. Innovation happens overnight. Last week’s revolutionary new approach is today’s old news. Nowhere is this more apparent than in the world of IT, where keeping up is a challenge for everyone.

Software development, in particular, can be a tough game to play. Competitive doesn’t even begin to describe it. As the number of players increases, innovation goes into overdrive, and projects become more elaborate. Oh, and let’s not forget that niches are becoming narrower by the day. What is one to do?

The last issue may actually be the missing piece of the puzzle. Instead of dreading narrow specialization, why not harness its power? In case you’re wondering what I mean, the answer is fairly simple: I’m talking about leveraging software development multisourcing. 

What’s this new stuff all about?

The approach isn’t exactly brand new but it has gained traction somewhat recently. As its name implies, software development multisourcing simply means you’re obtaining digital products or services from various different sources.

After all, a larger project will often involve areas of expertise that might be impossible to cover by a single company or team. One group may deal with the code, another with security, and somebody else altogether may design the interface. The best part about this isn’t just that you can secure highly specialized talent for your project but rather that geographic restrictions don’t apply here.

The 3 main strategies

Cooperating with multiple third-party suppliers outside of your organization requires a methodical approach. There are a few different strategies for software development multisourcing that you may consider.

  1. Multiple sourcing. It implies relying on services of several vendors or providers. Very often, the teams will hail from different countries or even continents.
  2. Dual (or double) sourcing. Hiring two different IT providers, each bringing in a unique expertise. Normally, they should be within the same country or at least from the same geographic region. This practice is also known as nearshoring.
  3. Cross-sourcing. Each provider is responsible for a particular function or service, offering a rather narrow focus on a specific niche.

The benefits you can reap

Before you make a decision or commit to implementation, it’s important to understand the potential perks of using multisourcing. This stuff isn’t just about optimized resource allocation. There’s so much more to it! So let’s discuss the advantages of having a software development multisourcing strategy in place.

1. Greater flexibility

The nature of your project may change at any given time. Is your existing team able to adapt to the new environment or set of expectations? Large organizations tend to be set in their ways and bigger remote teams that have been working with you for a while can behave the same way. That’s why mixing things up a bit can ensure you get more flexibility.

Multisourcing offers you access to more resources. For example, a vendor that specializes in backend development will be more knowledgeable about the current trends, and thus quicker to adapt to a new methodology.

Picking and choosing the right provider for each task will let you leverage diverse and highly specialized skill sets. It’s a great way to optimize resource allocation and speed up the time to market.

2. Risk management

Development can be a risky business, especially if you put all your eggs in one basket. A major vendor can experience problems of their own and bring your organization down with it. This is where diversifying and creating vendor-specific regional projects can create a safety net and prevent everything from grinding to a halt.

The trick is to retain centralized project management in order for everyone to remain closely aligned. Strong communication, careful coordination, and standardized performance metrics will make the process a lot smoother. Oh, and let’s not forget carefully crafted service-level agreements and a strong emphasis on legal compliance. After all, your intellectual property is your greatest asset.

3. Diverse talent

The need for IT talent has grown massively in recent years, so it’s not surprising that it all led to an obvious talent shortage. We’re talking about the lack of experienced full-stack developers, data scientists, DevOps engineers, and QA engineers to fill available roles. It’s no wonder the digital transformation isn’t what it should be. Fortunately, software development multisourcing can aid your projects by tapping into a global pool of niche talent and specialized skills, experience, and knowledge.

Not only will you benefit from unique skill sets and boost your operations but you’ll also gain an advantage in the realm of innovation. After all, fresh ideas are what you need to take steps forward. Software development multisourcing thus becomes a great way to create better outcomes and gain a competitive edge on the market.

4. Cost efficiency

Anyone running a business will be acutely aware of the costs involved. Remote work has already solved a part of that problem as it’s often cheaper to hire remote teams than paying for office space and other expenses involved in running a traditional business.

If your goal is to stick to a tight budget, multisourcing can turn things in your favor in a somewhat unexpected way. By casting your net into a global pool of talent, you can create a situation in which several vendors will bid for one or more of your project components. You’ll be able to negotiate better pricing and achieve greater financial optimization.

5. Immunity to global shocks

The global pandemic and the subsequent war in Ukraine have both left a mark on the global economy. What we don’t discuss nearly enough is how all this did (and still can) disrupt the IT industry.

Anyone building a robust digital strategy therefore must take into account potential political tensions, trade conflicts, and economic sanctions. Software development multisourcing can help you avoid facing partial (or complete) inaccessibility of essential services.

A few downsides to be aware of

While there are many benefits to multisourcing, this doesn’t mean that you should simply rush into any new methodology that comes along. The more informed you are of the risks, the higher the chances of avoiding them. So let’s touch upon the potential disadvantages of multisourcing.

  • The larger your network becomes, the more complex the management process is likely to be. This can lead to infrastructure efficiency problems and time-consuming operations.
  • Communication is another issue likely to arise in an elaborate network. Tensions between partners and unhealthy internal competition are perfectly realistic scenarios.
  • Last but not least, there’s the ever-present concern about online safety and security. The more providers you include, the more likely you are to face leaks or intrusions.

The implementation process

You should be able to mitigate those potential issues by adhering to some basic steps. In order to establish a solid foundation, you ought to:

  1. Clearly define goals that are crucial to the success of your project. Let long-term objectives guide vendor selection.
  2. Establish relevant metrics that will help you with selection and evaluation. Expertise, experience, and references must align with your project requirements.
  3. Create governance and collaboration frameworks to guide supplier management and selection of appropriate collaboration tools.
  4. Focus on cross-team coordination and accountability, pinpointing roles and responsibilities from the get-go.
  5. Monitor and evaluate performance through relevant metrics and KPIs to ensure your project’s ultimate success.
  6. Develop a strong security strategy to reduce potential issues when dealing with sensitive information. 

Should you give software development multisourcing a go?

Ultimately, the goal is to acquire a balanced view that will help you make the right decision for your company. The advantages are numerous and not easily ignored. They include increased flexibility, improved risk management, access to a more diverse pool of talent, reduced costs of development, and potential immunity to global change.

Of course, you shouldn’t ignore disadvantages such as complex management processes and communication hurdles which may potentially slow down your operations. However, a robust framework that clearly defines roles, communication methods, and legal compliance will mitigate most of these issues.

Take your time to prepare, test the waters, diversify, and expand. You don’t have to commit to a major overhaul. Hiring a couple of specialists or a small team will allow you to see how things go. After all, steady and methodical implementation means you’ll be setting yourself up for success.

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