Finding a suitable provider by sole sourcing

The number of outsourcing deals that have been put together as a result of single tender or sole sourcing arrangements is variously estimated to be anywhere between 25 and 60 per cent of the total for all deals. Whatever the true figure, it is, on the face of it, quite extraordinary that any client organization should not bother to take advantage of competitive advice, ideas and quotations when making a very important outsourcing decision.

A number of service providers and consultancies such as Unisys, argue that sole sourcing is good for the client and give reasons such as the following.

• Saving time and money are two of the main motives for outsourcing, and when a customer selects a single vendor to perform a service instead of going out to competitive bid, even more time and money is saved.

• Sole sourcing can increase the control an organization has over the outsourcing process and adds value to the situation.

• Sole sourcing shortens the procurement cycle.

• Sole sourcing reduces procurement cycle costs.

• The alternative request for proposal (RFP) process has become extremely costly and time consuming.

Without doubt, there are organizations whose need to outsource is so pressing that they probably do need to avoid the time taken in setting up a competitive situation. It is equally true that the time taken to organize a competitive base via a RFP is normally much too long and is frequently ludicrously expensive. However, advocates of full competition will justifiably argue that the client organization is going to get much more control over the outsourcing process by creating a competition. They will also be quick to point out that sole sourcing runs the risk that there is no obvious second provider to fall back on if the deal with the first choice company falls through.

It may be that some client organizations have made a deliberate decision to save time and cost by going the sole sourcing route. In most cases, though, sole sourcing appears to happen from a variety of ’accidents’.