Everything You Need to Know about Co-Sourcing

Everything You Need to Know about Co-SourcingBetween adding more to your staff or hiring contracting third-party personnel, which would you choose? 

There are pros and cons to both. As a business owner, you would have to think about these things repeatedly as your decision will directly impact your entire company.

Enter co-sourcing. If it sounds new, then read on to learn more about it.

What is Co-Sourcing?

Think of it as a partnership–one wherein you can focus more on your business rather than wondering if you’ll ever find the right people all on your own. The critical word here is “partnership,” as co-sourcing is not a rigid contract.

Co-sourcing is a relatively brand-new business model wherein your co-sourcing partner will work you to understand your business’s goals in the short, medium, and long term. Furthermore, they will also look carefully into your company’s culture, future growth, the resources available to you, and the skills that need to be filled.

Once your co-sourcing partner has a better grasp of your company, they will develop an agile plan fit for your business. At its very core, co-sourcing is finding that balance between in-sourced and outsourced support and combining them in a way that will fit your need and the circumstances your business might be currently facing.

Collaboration and partnership are a massive thing in co-sourcing. 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.

Your co-sourcing provider has your long-term interests in mind. They achieve this by providing sustainable solutions that will eventually offer the best outcome across all areas of your business.

Co-Sourcing vs Outsourcing

This will always come up when you’re considering co-sourcing. The line between co-sourcing vs outsourcing remains blurred as the former is a newer concept while the latter has been around for several years.

Here are the main differences between co-sourcing and outsourcing:

  • Control
    With outsourcing, you don’t have a direct team committed to you as the provider is typically the one managing and controlling your team.
    With co-sourcing, on the other hand, it’s the complete opposite.
  • Quality
    Between outsourcing and co-sourcing, the latter has a more significant advantage in terms of quality. With outsourcing, resource quality is next to none, and it cannot be controlled. There is no way to predict the outcome in terms of timeliness or project quality. When you outsource, it’s challenging to implement and enforce your procedures, standardizations, and policies. Meanwhile, co-sourcing gives you control over the quality of resources, leading to improved predictability of timeliness and work quality. This comes from the fact that there’s a partnership between you and your co-sourcing vendor. The methodologies, policies, and standards that are unique to your business will be followed.
  • Accountability
    The thing about outsourcing is that ownership and accountability often get transferred to the vendor. Co-sourcing is different in that team members gain a sense of ownership; hence, they are accountable for both failures and successes.
  • Business Value
    There is no knowledge available or expected with outsourcing, so for every new project that your business will have, there most definitely will be an associated learning curve. This will cause a time lag before you can expect the team to become productive. On the other hand, 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. This team will maintain valuable relationships that are formed between local and remote resources within your organization.
  • Knowledge
    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. Quite the opposite happens in outsourcing, as the vendor is the primary recipient of your organizational knowledge. Hence, tacit knowledge becomes lost even if knowledge transfers are possible.
  • Learning Curve
    Another good thing about co-sourcing services is that there is no ramp-up time required for your business’ new projects and initiatives. The team is strictly aligned with what you have in mind for the long-term, including your strategy and vision. The team retains everything they have learned and understands your products or services to avoid an outsourcing team.
    With outsourcing, there is a need to provide tons of background information as well as your company vision to achieve the kind of alignment that you have envisioned for every new project and initiative.
    With these comparisons between co-sourcing vs outsourcing in mind, you should seriously consider co-sourcing if you want to have direct control over your development functions and want practical actions equivalent to your strategic directions.
    Furthermore, if you and your company are on track, co-sourcing is an excellent solution if you don’t want to deal with constant renegotiations due to scope changes.

Co-Sourcing in the Real World

Co-sourcing services have helped many companies that do not have the staff capability to deploy new systems. If you need an internal audit staff with specialized skills for functions such as integrity services or information risk management, co-sourcing can be your solution. Co-sourcing can aid you during peak periods as well. 

An example of co-sourcing services in action is when an organization develops a large and complex software application partly in-house and outsource part of the development to a co-sourcing provider. In this case, the co-sourced resources will then retain the knowledge they have gained during the software development process. Should the software application need maintenance and occasional enhancement, they can do so without relearning everything from scratch

Another example is sales. With this arrangement, your co-sourcing provider will act as a sales manager. They become an extension of your management team as they will assist you in hiring a sales team, training them, and subsequently managing them daily.

The Co-Sourcing Advantage

With co-sourcing services, you can focus on your business and its core offering. You’re lowering the costs of your back office or administrative functions, but at the same time, you still have control over the critical parts of the client relationship. This is in direct contrast with outsourcing, where cost-cutting takes the front seat. 

Co-sourcing is all about developing a long-term relationship with a business partner in that there needs to be trust between both parties to achieve outstanding service that you would probably only associate with a partnership rather than a contracting arrangement.

There’s a shared responsibility between you and the co-sourcing provider and you have the same goal in mind–to deliver quality product or service to the end customer.

Over the years, co-sourcing is increasingly recognized. This is because this sourcing model has the edge over the traditional outsourcing approach as it provides a sustainable competitive advantage.

Whether you need solutions for design and development, sales, accounting, and telecommunications, co-sourcing is something you should consider. It will deliver another element to your toolbox to enhance your deliverables and improve productivity, minimize sourcing risks, and increase transparency. At the same time, you enjoy great control over your costs.

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