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Co-SourcingThe Ultimate Guide of 2023

Co-sourcing is a term that confuses a lot of people. Some even use co-sourcing and outsourcing interchangeably. To clear all confusion regarding co-sourcing, we will guide you through its vast world.

This article will help enable you to recognize co-sourcing in business transactions. This will help you to know how and why it is used.

After you read this article, you will have a clear understanding of co-sourcing. It will allow you to deal with other businesses to open new opportunities and collaboration. So what are you waiting for? Let’s now delve into the world of Co-sourcing.

Whatis Co-Sourcing?

Co-sourcing is a partnership between a customer and a professional service provider or a vendor. A company selects a vendor to work alongside its team that is involved in constructing a project. In simple terms, the internal staff of a company will work with an external organization to do a certain task. Once the task or project is finished, the service provider’s job is also done. 

Co-sourcing is different from consulting as the employees take an active part in the project. In consulting, all work is done by a consultant who usually works independently. The consultant makes plans and reforms that it will show to the company. 

Co-sourcing has helped a lot of companies throughout the years. It helps companies that do not have skilled staff who can deploy or integrate new systems. Co-sourcing also helps by bringing the needed professionals like engineers and architects for temporary assignments in overseas locations. 

HowCo-Sourcing Works?

Co-sourcing is a way of partnering your business with an expert service provider. With this being said, it works in collaboration with your team in the company who also plays an active role in co-sourcing.

Initially, small to medium-sized firms offered co-sourcing. Throughout the years, large firms have now adapted this and offer a wide range of co-sourcing services. These services partner with all kinds and sizes of companies. An example of the services offered are the:

1. Internal audit support

This includes the reconciliation of foreign and specialized accounts, disclosure, valuation, and compliance issues for some types of inventory.

2. Diagnostic review

Service includes a review of specialized areas which are secondary marketing in the mortgage industry and hedging practices. It also includes a valuation method of mortgage servicing rights and other hard-to-value assets. 

3. Staff evaluation

This service includes the evaluation and training of employees in the company. It also covers developing training programs or the development of systems that can be used for the standardization of processes. 

Using co-sourcing in your business creates a lot of long-term advantages. But how will you know when to use it? Below is the list of situations where you can consider using co-sourcing:

  • Desiring direct control over your IT development functions.
  • You want to leverage and retain corporate knowledge in your company.
  • A desire to build a relationship with a competent partner to benefit and add value to your firm. 
  • You want exact and timely knowledge about performance.
  • Keeps avoiding constant price negotiations because of the changes in scope that inevitably occurs in a fast-changing business environment. 
  • You want quick and effective actions that are applicable to your strategic directions.
  • Your outsourcing needs are continuous.
  • You like to create competitive advantages by making a strategic organization that understands and connects with the world. 
  • Wanting a fixed cost. 

3 Tipsfor Evaluating Co-Sourcing Providers

1. Know your Business

You must know and stand with the core values of your company when you collaborate with a potential vendor. This will allow you to know if it matches your strategic direction and plans for the project.

2. Determine the co-sourcing process

You must know what help you need in order to start the project efficiently. You also need to know the degree of control you want to retain over the span of the project.

Identify the abilities of your personnel, the allotted budget, and constraints. This will allow you to lessen the risk that may appear in the future. 

3. Assess your potential vendors

You need to contact your potential vendors when you want to assess them properly. Submit a request for a proposal and ask to meet with your vendors to discuss the project. A motivated and committed vendor will get back to you immediately once you have submitted your request. 

You can ask for references to see if it has served and satisfied numerous clients. You must also determine the provider’s familiarity with your specific project. This allows you to know that the project you will entrust to the vendor will be constructed successfully.


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DifferenceBetween Co-Sourcing and Outsourcing

Co-sourcing and outsourcing are often used interchangeably. But these two have their own unique differences. Below are what differentiates co-sourcing and outsourcing:

You hire or acquire an external resource that becomes a part of your team. This external resource will work side-by-side with your on-site personnel.
You do not hire a consultant but a co-worker
Co-sourcing combines some of the benefits of insourcing and outsourcing.
Outsourcing involves transferring a portion or sometimes the complete operation to outside providers or suppliers.
Internal workers are not an active part of the project.
Outsourcing has no dedicated team under your control.

Advantages and Disadvantages of Co-Sourcing

Co-sourcing generally has a short period and it has no long-term obligation to the service provider.
Projects can be planned and constructed quickly without the addition of new staff due to their flexibility and control.
Co-sourcing allows you to have the best possible vendor you can collaborate with.
Some employees may find themselves in an argument with their outside partners due to misunderstandings.
If co-sourcing is successful, the owner of the company might completely turn into an outsourcing arrangement. This situation may take over the entire internal staff function.
The company’s internal staff may develop a silo mentality. This mentality pushes to keep viable information about the company to its vendors. This, in turn, may cause profitability issues in the company.

Frequentlyasked questions

+ What is co-sourcing?

Co-sourcing is the collaboration of external forces with your internal staff to work on a project.

+ What is the difference between co-sourcing and outsourcing?

Co-sourcing hires a service provider that becomes a part of its team which will collaborate to finish the project. However, outsourcing hires an outside contractor to finish the project without the active part of internal staff.

+ What should I use for my company?

This depends on the arrangement that you want in your company.

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