In an IT outsourced having multiple vendors is very common, though some large corporations have gone towards a single vendor to gain rate advantages there is always a case for existence of other vendors for quite a few reasons ranging from niche skill sets, bringing external or independent consulting where the vendor lacks experience, acquisitions and JVs, product implementation that needs consultants from the product seller etc., there are lot more reasons likewise which makes the IT outsourced environment a bit challenging.

Managing multiple vendors requires strong governance. the tendency to show one-upmanship is always a cause for concern and that can lead to anything from missed delivery to finance, legal and security issues. Frequent squabbles between the multiple vendors can cause deep disruption, missing out on deliveries, needless friction and demotivation just to name a few.

In some organizations having multiple vendors is seen as an advantage to induce competition, as long as it is healthy it is beneficial. However constant monitoring, providing support and being the neutral partner to ensure there are no conflicts of interests. Where both vendors are on the same initiative or project is becomes more important to stay focused on ensuring there are no issues. Now a days most contracts have some wording to imply coverage in this scenario, most details in the SOW or MSA.

There are good examples of organization where multiple vendors were seen as a drain and eventually saw reduction in the number dwindle to one or two. More vendors means more governance, control on finances, lack of consistency, multiple sites to administer, favouritism putting more managerial resources and it all plays into your IT budgets. Frequent transitions between vendors is also a hidden cost and loss of subject matter experience and introducing learning curve.