Co-sourcing vs outsourcing: sharing the work

Key takeaways

Co-sourcing vs outsourcing is about shared ownership. In co-sourcing, your in-house team and a provider deliver the same function together, with your team keeping accountability and the provider adding capacity or expertise. In outsourcing, the provider owns delivery. Co-sourcing keeps more control and knowledge in-house at a moderate saving.

• Co-sourcing: your team keeps accountability and works alongside the provider.
• Outsourcing: the provider owns delivery against service levels.
• Co-sourcing: keeps knowledge in-house while adding capacity.
• Outsourcing: gives the larger saving for repeatable work.

What is co-sourcing?

Co-sourcing is a delivery model in which an in-house team and an external provider share responsibility for one function. The in-house lead sets direction and owns results; the provider supplies extra capacity, specialist skills or extended hours, working inside the same process and systems. It is common in audit, finance and IT, and works for operations too.

• In-house vs outsourcing: which model is more cost-effective?

How is co-sourcing different from a hybrid model?

In a hybrid model, work is split: the provider handles defined tiers or hours and the in-house team handles the rest. In co-sourcing, both teams work on the same processes side by side, often on the same cases, under an in-house lead. Co-sourcing is closer collaboration; hybrid is a cleaner division.

• The hybrid model: part in-house, part outsourced

What does co-sourcing cost?

You keep the in-house lead and core team, and pay the provider for the capacity or skills added, an indicative £9–£18 per hour offshore for support and admin. The saving comes from not hiring for peaks or niche skills. Management time stays higher than full outsourcing, because your lead coordinates both teams.

• The management time cost of an in-house team

When does co-sourcing work best?

When the function needs in-house judgement and knowledge, but also more capacity or a skill you lack, such as a finance team adding month-end support, or a customer team adding weekend cover with shared case handling. It also suits businesses that want to learn how a provider works before outsourcing more.

• Run an outsourcing pilot before you commit

When is full outsourcing better?

When the process is repeatable, well documented and not core, and you want the largest saving with the least management. Co-sourcing a simple process adds coordination cost without much benefit.

• BPO Solutions for UK businesses

How do you make co-sourcing work?

Use one set of processes, one system and one scorecard for both teams. Name the in-house lead as accountable, agree how work is allocated each day, and meet briefly each week. Treat the provider's team as colleagues, not overflow.

• A simple BPO governance model

Who is accountable in a co-sourced model?

Your in-house lead is accountable for results, and the provider is accountable for the quality and timeliness of the work its people deliver. Write both down. Without a clear split, problems bounce between teams, which is the most common reason co-sourcing disappoints.

• The management time cost of an in-house team

What does this look like in practice?

A pattern we see in UK accountancy and brokerage firms: an in-house team keeps client relationships and reviews, while a co-sourced offshore team prepares documents and data inside the same case system. Both work to one checklist, and the in-house team handles more clients without new hires.

• See client work

Co-sourcing checklist

Use these steps to set it up.

• Name the accountable in-house lead.
• Use one process, one system and one scorecard.
• Agree how work is allocated daily.
• Hold a short weekly joint review.
• Review whether to move to hybrid or full outsourcing after 6 months.

Next step

Tell us which function you want to share. We will compare co-sourcing, hybrid and full outsourcing in a 30-minute call.