Executive Summary

As Application Development and Maintenance (ADM) outsourcing services have grown rapidly based on the power of the labor arbitrage value proposition, many organizations outsourcing ADM utilized multiple third-party suppliers.  Motivations for using multiple suppliers are far ranging; common examples are variations in suppliers' capabilities, localized decision-making across an enterprise, and a desire to retain competitive tension.  

The portfolio of suppliers serving a company is often complex and creates considerable challenges to manage and optimize.  Consequently, leading companies rationalized the number of suppliers in their ADM portfolio and attained financial benefits plus a less complex sourcing environment.  Other companies now pursue similar objectives.

In this whitepaper, we analyze the costs and complexity of managing multiple ADM suppliers and how buyers can benefit from limiting the number of suppliers in their portfolio.  The whitepaper addresses three areas:

• Multiple supplier ADM portfolios: Evolution and context
• Costs associated with managing multiple ADM suppliers
• Approaches to manage complexities arising from multiple suppliers