UK organisations lead the world in IT multi-sourcing

UK organisations are the most mature multi-sourced IT outsourcers in the world, with 44% of all outsourced services split between five suppliers.

Research of Global 2000 companies from Information Services Group (ISG) revealed the UK’s widespread use of multi-sourced IT outsourcing.

In the UK, 44% of outsourced functions are split five ways and only 6% of contracts are single-sourced. A total of 22% use the model where 80% of the work is with a single supplier and the remaining 20% divided up, said ISG.

Regions that are immature compared to the UK in outsourcing terms, such as southern Europe and the Nordics, are also eager to multi-source according to ISG’s findings.

In the southern Europe region – which ISG defines as France, Spain, Portugal and Italy – 56% of contracts are multi-sourced between two and four different service providers and 7% use five or more suppliers.

In the Nordic region, 65% of all contracts are multi-sourced. In the DACH countries – Germany, Austria and Switzerland – 40% of all contracts are multi-sourced.

John Keppel, partner and president of ISG North Europe, said there has been increased deal fragmentation for quite some time now, but different markets exhibit varying appetites for this.

He said the US has tried multi-sourcing but, in many cases, gone back to the more traditional model. 

“More mature markets, like the US, have previously embraced multi-sourcing but realised it can be difficult to manage the numerous supplier relationships and have swung back towards a model with fewer providers.”

But he added the UK is still in the honeymoon phase. "The UK is employing more sophisticated management models, such as the service integration and management (Siam) method to maximise efficiency,” said Keppel.

The proportion of IT outsourced to third parties will only get bigger and more complex as new technologies, delivery models and suppliers come to market with technology to address business challenges, which means procurement departments must ensure their IT sourcing policies meet business goals.