Co-Sourcing? All the Cool Kids are Doing It.
Say, who does your marketing?
We do that all in-house.
Our partner firm handles that.
We outsource that solution so we can stay lean and focus on our core strengths.
Which one is right for you? For which department?
The right structure is the one that brings value. Core competency performance is not necessarily compromised by doing things in-house, but the benefits of having the experts do it (outsourcing) have been long realized in our just-in-time business world. Sometimes companies come back to managing internal teams (insourcing). It’s best to adapt your model as circumstances change.
Why outsource to begin with? What’s in it for you? The main reasons companies look for outside consultants are due to a lack of:
- Capacity
- Expertise
- Time
It could be populating a new CRM, or maybe the team is expanding and you have outgrown your HR capabilities. It could be new compliance mandates. Perhaps your IT department is overwhelmed with the same issues coming up repeatedly. These are areas that are easy to quantify and a bit of forecasting and budget planning will give you your answer.
Getting back to the value question, what about when it isn’t so clear? What about when you have a situation where you can’t see the clear cost-benefit difference?
Let’s say you secured a major project and you need a variety of skill sets all at once, and are considering short term hires. Or maybe you have a dedicated budget for a project and you want to get the absolute most for that budget. Perhaps you are expanding and you’d benefit from a time-limited partner. You might consider a hybrid model called Co-Sourcing.
What is
Co-Sourcing?
Co-sourcing is a relatively new business model. It’s a hybrid between insourcing and outsourcing, where companies hire an external team to act as their internal team. Co-sourcing is an approach where the internal and external teams work side-by-side sharing risks, facing issues, and quickly coming up with solutions to challenges, and a model that has emerged from the need of creating value for both companies.
Co-sourcing aims to find the balance between in-sourced and outsourced support and combine those in a way that fits the need and the current business circumstances. Co-sourcing has been gaining popularity in the realms of IT and Accounting especially because both firms benefit and share risks. There are other situations where a co-managed services model can help.
Take your new website development. You can have your IT and graphics people build it. Most firms with 100 or so employees are already keeping those departments very busy, and with an average website requiring weeks of work, something will fall behind. So, you can outsource that with little hesitation, after all; website companies are everywhere.
But what if the website is e-commerce and will be an ongoing affair, month over month, year over year? You will certainly need someone in-house at least part of the time taking care of the content, pricing, and customer service. But if you meet the right marketing or digital firm, one who is in an aligned phase of their own development, they may want to forge a long-term relationship and maybe even build their own team around your big project or campaign.
Differences between co-sourcing and outsourcing
| Outsourcing | Co-sourcing | |
|---|---|---|
| Quality | Cost-cutting takes the front seat on both sides. | Co-sourcing gives you control over the quality of resources.
With joined long-term interests in mind, sustainable solutions are favored. |
| Accountability | The ownership and accountability is transferred to the vendor. | Co-sourcing team members gain a sense of ownership; hence, they are accountable for both failures and successes. |
| Business Value | For every new project, before the team can be productive there will be an associated learning curve that will cause a time lag. | Co-sourcing gives you a dedicated team that builds a knowledge base that is mainly designed for your business operations, products, or services as well as the software and tools you have on hand. |
| Knowledge | Tacit knowledge becomes lost even if knowledge transfers are possible. | Co-sourcing values the knowledge and learnings that are gathered first hand. The teams then retain and leverage whatever they have learned within your organization. |
| Turnaround | New projects/initiatives require tons of background information to achieve the alignment you expect. | No ramp-up time is required as the co-source team retains everything they have learned and understands your products/services. |
| Efficiency and Productivity | Co-sourced providers can introduce improvements and best practices to the internal control environment much faster than in-house personnel acting alone | |
| Focus | You focus on delegating a task for completion. The provider focuses on completing the task for you. | You and the co-sourced partner are focused on the outcome of the collaborative partnership–to deliver a quality product/service to the end customer–and thus gain a competitive edge. |
| Responsibility | The responsibility is transferred to the vendor. | Responsibility is shared between you and the co-sourcing provider |
| Culture | You have minimal managerial control over the methods of the outside organization that was hired for the project. |
Benefits of co-sourced support
Focus
You can focus on your business and its core offering.
Efficiency
Having an external team lowers the cost of your back office or administrative functions, helps with workload distribution and prevents build ups and delays.
Know-How
If you don’t require a large team on a day- to- day- basis, but do require additional assistance in to perform specific functions where your internal team doesn’t have the right skill set, co-sourcing provides you with reliable, high quality and experienced support where and when required.
Scalability
Co-sourcing allows you to increase your support in-line with your business needs during peak periods when you do not have the staff capability and require extra support, Third parties are well-equipped to solve specific problems in tight time windows.
Flexibility
Your co-sourced partner can fulfil internal service requests, freeing up your team to focus on new projects. Alternatively, if your team focuses on internal operations, your co-sourced partner could take responsibility for larger projects. Either way new improved systems can be deployed to add value to your business.
Co-sourcing phases
Discovery phase
Your co-sourcing partner will:
- Understand your business’s goals and align with what you have in mind for the short, medium, and long-term, including your strategy and vision.
- Look carefully into your company’s unique business culture and follow your methodologies, policies, and standards.
- Identify the resources available to you to identify what gaps need to be filled.
Planning Phase
Once your co-sourcing partner has a better grasp of your company, an agile plan fit for your business will be developed.
Execution Phase
You and your co-sourcing provider will collaborate to form workgroups to support and sustain different business functions. Depending on the type of support you’ll need, these workgroups will typically work remotely or within your site.
Sourcing trends
- Co-sourcing will become the new norm as businesses choose to support each other.
- SMBs and startups will be the ones offering more business to outsourcing service providers.
- Instead of service providers companies will look for services integrators who specialize in bringing together component subsystems into a whole and ensuring that those subsystems function together.
Take away
- Co-sourcing addresses people, process and technology gaps.
- Design, Development, IT, Communications, Marketing, SEO, Promotion, Automation and much more can be co-sourced.
- Co-sourcing enhances your deliverables, improves productivity, minimizes risks, and increases transparency.
- Trust, collaboration and partnership between you and your co-sourcing team are the drivers of success for both companies.
- Call our team of experts. Let’s talk! 905-564-6450!