The long-term nature of co-sourcing relationships makes it imperative for both the client and the service provider to partner with true synergies in mind. Co-sourcing also provides stability for both the client and the provider. The relationship allows issues to be tackled in a holistic manner with a longer-term perspective than is the case when working with conventional outsourced or consulting providers.
Unlike traditional outsourcing engagements, co-sourcing involves transparent billing, which provides the fund with operational advantages and related cost savings. Use of offshore workforces can provide time-zone advantages and added scalability. Co-sourcing also provides the client and its employees with the freedom to focus on critical value-add activities, as more routine work is co-sourced to the provider. As the co-sourced vendor grows its client base, it cultivates higher-value expertise and, in turn, the ability to provide higher-value services.
The level of integration and strategic alignment that it affords sharply distinguishes co-sourcing from conventional outsourcing. Under an outsourced agreement, little ownership resides with the client and the lion’s share of accountability rests in the hands of the vendor. With co-sourcing, the vendor team is a vital extension of the client’s onsite team, fostering a measurably greater sense of ownership and accountability while reinforcing confidentiality.
Co-sourcing is not a blanket panacea for every situation. Implementing a co-sourcing model poses specific challenges to firms with large outsourcing businesses, such as a fund administrator, since it requires close adaptation to a client’s established business model. The more mature the client’s business model, the greater the demand for an innovative service provider that can leverage people, processes and technology to provide a tailored co-sourcing solution.