It is the contracting out of a non-core business process to a third-party and payment linked to with SLA (Service Level Agreement) achievement.
Components for which departments can build the required internal resources, and which requires strategic control shall be self managed. The components to be outsourced are to be identified and then the department can go in for single or multiple vendors.
The outcome of having multiple vendors includes
- Better suited for large agencies with highly specific and strategic ICT functions
- Provides greater control over vendor performance
- Requires higher capacities in the department and higher coordination risk
- Allows for best of the breed solutions in each component
- Identify opportunities for bundling outsourced components: One or Multiple outsourcing vendors
The outcome of having single vendor includes
- Optimum option if all the components for external sourcing can be bundled into one group
- Suited for smaller agencies and agencies in which ICT is not highly strategic or customized
- Subcontracting and Consortium arrangements may be used to bring in diverse capabilities with one single entity taking overall responsibility
- More cost effective than managing multiple vendors
