November 30, 2012

What is co-sourcing?

Given the choice of adding more in-house staff or contracting third-party personnel to complete tasks, more and more organizations find co-sourcing is a better alternative. The Business Dictionary defines co-sourcing as "the combining of services from within and outside a business to achieve the same goal."

In-sourcing requires taking on additional personnel to provide the expertise or manpower required for a given task, creating a fixed cost. Outsourcing eliminates the fixed cost, but often results in loss of control over the process. But a new paradigm has arisen.


Co-sourcing is similar to hiring a consultant or contractor on a continuing basis. With co-sourcing, you obtain an external resource that becomes an integral part of your team, working side-by-side with your on-site personnel.

Outsourcing routine tactical processes to allow staff members to focus on business-critical, strategic projects has developed as a routine management strategy. However, additional expertise is occasionally needed to accomplish strategic goals as well. Co-sourcing vendors provide that level of expertise.

With co-sourcing, you don’t hire a consultant; you hire a coworker. For example, human resources might bring in a consultant to develop a compensation plan. Once the plan is complete, the consultant moves on. However, HR might need additional expertise in complying with employment regulations and documentation for a particular project. This requires experts working alongside your staff members. This is the time to engage co-sourcing.

The line between co-sourcing and outsourcing – consulting and contracting – remains fuzzy. When third-party vendor personnel must integrate with your staff on a deeper level, the more likely you are engaged in co-sourcing rather than outsourcing. Likewise, the longer the relationship continues, the less likely you need a consultant or contractor.

Co-sourcing can be a solution in any business process, from design and development to sales and accounting. It delivers another element to the executive’s toolbox for controlling costs, improving productivity and enhancing deliverables.

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