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:

  1. Capacity
  2. Expertise
  3. 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