Middlesourcing: The New, New Idea

SDA Asia has published a couple of articles about the topic of "middlesourcing." Espoused by Mercury Interactive, middlesourcing is the idea of hiring a third-party firm to manage your outsourcing -- in other words, outsourcing it.

The more interesting article here is an interview with Mercury's Graham Sowden, who drills down on the concept.

Here's how he explains the term:

Mercury is seeing a trend in "middlesourcing". Middlesourcing is helping companies in the west manage their IT outsourcing contracts with less developed countries in the region such as India and China. And vice versa, by helping countries like India and China manage their outsourcing contracts with large organisations in the west.

Reporter Dilip Thomas, who does a great job in asking all the questions I would want to ask on the topic, says, "Does that mean that now companies have to manage the middle sourcer instead of the end outsourcing partner?"

Alas, Sowden doesn't answer directly. His response: "Many companies often outsource the lower-value work, such as software development. When you outsource software development and you don't ensure that the outsourcer has a good quality assurance and application testing process in place, problems occur."

My guess is that the answer is yes, but that doesn't play well with the idea of giving up even the management of outsourcing. What a middleman-service provider could provide is expertise on automated tools for governance, an understanding of what other companies are doing in the same tech space, and so on. But what you give up -- true, unbiased visibility into the process -- may not be worth it in the long term.

The second story on the topic, here, is more about how Singapore can move up the IT value chain to take on management of lower priced services being delivered from the low-wage countries.