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How Can Co-Sourcing Benefit Businesses?

Minakshi Bindhani

| Updated: Jan 31, 2023 | Category: Partnership Firm

How Can Co-Sourcing Benefit Businesses?

In recent times new methods of outsourcing is to redefine the way of working.  Co-sourcing involves a collective agreement between the vendee and multiple clients. However, it is a balancing act, extracting the best of in-sourced and outsourced support and combining them in a way that would be a tailor-made business. It is likely to hire a contractor or a consultant, it allows companies to access an external resource that enhances their internal team. In this case, internal employees will be working along with outsourced teams.

What Is 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 internal team that is involved in constructing a project. Companies aren’t simply hiring a consultant or an agent, they’re hiring an external professional to work alongside their existing talent to get additional support to deal with a financial transaction in their business. Therefore, it is a way of partnering your business with an expert service and the focus on combining internal and external professionals. It is a strategy that can help to enhance the overall performance of a business and drive positive outcomes. This approach works well in situations wherein companies might need to access external expertise to achieve specific goals.

Co-Sourcing Vs Outsourcing

To find out which one is better for a company, it is best to know what these two concepts are first.

Outsourcing[1] happens when a company hires an external party to handle specific tasks or services instead of running them internally. Generally, companies choose to outsource to find highly skilled people or teams to handle complex tasks that require strict quality control or even privacy. The external resource accomplishes specific work.

For a better understanding, it is essential to know the main differences between the two. Here are some that companies should be aware of:


  • For outsourcing there is no direct team assigned to the company. The service provider manages and controls the team to handle the client’s sales needs.
  • In the other hand, there is a dedicated team committed to the company. The client has direct control and can provide directions.


  • In most cases, resource quality is next to none. The client cannot control. So, project quality and timeliness of results are not predictable.
  • But, on the other side, the client has control over resource quality. So, there is predictability in terms of work quality as well as timeliness.

Standards and Procedures

  • It may be challenging to implement and enforce the company’s standards, procedures, and methodologies since it does not control the sales team.
  • Whereas, it is possible to convey and execute the company’s standardizations, procedures, and methodologies.

Ownership and Accountability

  • Accountability and ownership are often transferred to the service provider or vendor.
  • But on the other side, team members usually gain a sense of ownership. So, they have a certain level of accountability when it comes to successes and failures.

Business Value

  • Usually, sales outsourcing does not offer prior knowledge. That means that an associated learning curve is expected for every new project. In return, there may be a time lag before the sales team becomes productive.
  • In the other hand, since there is a dedicated team in a company, the staff can build up a knowledge base specific to the business’s operations, its products or services, and even its software and other tools. It also allows the external team to have a working relationship with internal resources.


  •  Since the service provider is the primary recipient of the organizational knowledge associated with the company, tacit knowledge can be lost even though knowledge transfer is possible.
  •  The team gathers knowledge and learns first hand. That means there are knowledge retention and leverage within the company.


  • As stated earlier, there is a lag time in terms of the learning curve. The company needs to provide ample and relevant background information and inform the vendor of the company’s vision. This way, the team will be aligned with every new project.
  • Having a dedicated team prevents any additional time necessary to adjust to new projects or initiatives. That is because the team members get to retain learning and have a deeper understanding of the company’s products and services

Benefits of Co-sourcing in businesses

The benefits of the same are enlisted below

  • Cost-Effectiveness
    it has to offer a cost-benefit ratio. Significantly reduce the overall human resource cost and improve operational efficiency and provide support and advice on the exact combination of in-sourced and outsourced support required.  Additionally, hiring, training/retraining, related IT infrastructure, and termination costs can be eliminated.
  • Agility
    Another significant advantage is agility. An agile approach is to support the business infrastructure upscale or downscale at any point in response to internal and external changes. 
  • Improved business focus.
    With co-sourced individuals can help to remove the distraction of business infrastructure and focus on what companies do best, and provide core offerings.
  • Access capabilities and technology
    An individual can eliminate the need to invest in expensive technology and new capabilities, as well as the inevitable time pressure to roll out new initiatives by accessing relevant capabilities and technology via the provider.


Thus, co – sourcing is a way of partnering a business with an expert service provider. It works in collaboration with the internal team in a company and also plays an active role. Initially, small to medium-sized firms offered co-sourcing. Throughout the years, large firms have now adopted the same. It offers quick and easy access to valuable sources of skill and support in various industrial environments. However, it is common throughout the IT, sales, and software market, and can often appear in financial regions too. 

Read Our Article: Outsourcing your Business Functions? 10 key services

Minakshi Bindhani

Minakshi Bindhani has completed LL.M. with a specialization in Criminal Law from Madhusudan Law University, Cuttack, Odisha.   She is more inclined toward legal research and writing and have prior experience in Civil and Criminal litigation and content writing.

Business Plan Consultant

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