Co-sourcing as a Business Strategy: Why It Is The Best Software Development Solution

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Lowered costs, increased efficiency, and a greater pool of talented candidates are just some of the most widely publicized benefits of IT outsourcing. And it is not just IT - companies from a range of industries are taking an interest in this business model and are seeing profitable results.

However, IT outsourcing does come with a few concerns. 

Management difficulties, inconsistent communication, the lack of security and confidentiality are quite common challenges which, if improperly handled, can drive the company into the ground. 

As a result, co-sourcing grew in popularity as an alternative. It enables businesses to make arrangements with external vendors who possess specialized skills and experience to complete a part of the company’s operations. 

But isn’t co-sourcing the same as outsourcing?

Not really. 

Co-sourcing is a business strategy that strikes the perfect balance between the quality and dedication you get from an in-house team and the affordable expertise that comes with the outsourcing partner. It is the most viable solution for companies that don’t have the capability to employ a specialized in-house team (or at least not a large enough team).

Co-sourcing is also a preferable option for businesses that are experiencing rapid expansion, branching out, and tapping into global markets. They need dependable associates who can provide adequate support for the new endeavors. 

Basically, you get an external partner and make it an integral part of the team. 

What you get from a co-sourcing partner

An arrangement with an external vendor, in this case, enables the in-house team to preserve responsibility while delegating some of the software development processes to an outside ally. What motivates a growing number of businesses to dip their toes in the co-sourcing waters is a large list of benefits, with the most notable ones being:


Co-sourcing gives a chance to expand the search for talent to a global scale and build a relationship with a person or a team that meets all of the requirements. Owing to a wider candidate pool, you don’t have to make any compromises and can employ those who tick all of the boxes in terms of skills and have already successfully completed the same or similar project in the past. 


With co-sourcing, you get a committed team of developers that you are in charge of and not the service provider (as is the case with IT outsourcing). The fact that the company personnel are actively involved in the project is precisely what differs this model from consulting. Your in-house team members will be involved in all processes, working alongside the outside vendor to ensure their performance is aligned with short and long-term goals. 


With greater control over the software development process comes greater control over the quality of the final product. You get to enforce your own procedures and policies to make sure that the software is built in accordance with some of the standardized practices. Bottom line - planning and execution of a new project will go quickly and the quality of the delivered assets will be at the highest level. 


Unlike in a typical outsourcing relationship, a co-sourced team becomes your true partner. Each developer invested in the project gains a sense of ownership and as such understands that they are responsible for their success and failures. Such a work environment acts as a strong motivator, keeping all parties involved more engaged and devoted to the ongoing task. 

Accelerated onboarding procedures

It goes without saying that you will be searching for the most competent people who already have a fair share of relevant experience, but for the utmost project success, even the most skilled software developers need to give their 100 percent. When it comes to co-sourcing, a team is fully dedicated to the project at hand. Furthermore, they are focused on building a relevant knowledge base, which means there won’t be a steep learning curve and it will take much less time for the team to become productive.

Dependable long-term resources

Having built the software themselves, the co-sourcing partner will be the best maintenance team for the job (in situations where you don’t have the resources to employ one in-house). They will be at your service for any updates and enhancements, always on-call to ensure the software is running smoothly at all times.

Continual partnership

The development team retains any knowledge they gained while working on the project and are able to transfer it further within the organization. This gives you greater freedom to make long-term plans as they will be able to jump onto any new projects quicker and scale resources if the need for them arises. They will already have a complete understanding of your vision and goals, which means less time wasted on onboarding as the team will have the background info necessary to start the project. 

Learning potential

While working side-by-side with outside vendors, your in-house members will get a chance to grow their skills. The ongoing collaboration will give them insight into the external partner’s methods and approach to work, teach them how to look at some things from a different perspective, ultimately expanding their knowledge and expertise.

Lowered costs

A co-sourcing team is far more affordable than a team of in-house software developers, as the back office or administrative functions costs are taken out of the equation. However, unlike with an outsourced team, you retain control over the process which means that reduced costs don’t necessarily mean reduced quality of the result. 

Better focus

This form of partnership allows you to focus more on other important aspects of the business while you entrust the co-sourcing team to complete their work. Knowing that a part of the process is delegated to a professional with a specialized skill set gives you peace of mind and lets you wholeheartedly immerse yourself in other work that is your area of expertise and would otherwise be put on hold. 

How to choose a co-sourcing partner

Co-sourcing is all about developing long-term relationships, which makes the initial selection process exceptionally crucial. 

But to know what you are looking for in an outside ally, it is necessary to evaluate your internal needs. Using the company mission statement, analyze business processes, segment them into core and ancillary ones to understand which can be outsourced and which are better to be performed in-house. Once they are enlisted, you’ll have a better overview of the operations that will require an additional pair of skilled hands. 

Be specific regarding your needs; be clear about the goals, project requirements, the budget, expected level of expertise, the time frame within which the work needs to be completed, and communicate your concerns, if any. 

Now, when it comes to the co-sourcing partner, they have to:

  • Possess relevant experience and expertise - Choose to establish a co-sourcing business relationship with professionals who have an industry-specific set of skills that will enable them to commit to the project from day one. Be sure to ask for their references and portfolio of work to see just how experienced they are with project specifications similar to yours. 
  • Align with your vision - Make sure they are compliant to work within your business’ professional standards. They need to understand and fit in with the company culture since they will be expected to work hand-in-hand with your internal staff. Familiarize them with both project goals and company goals in the broadest sense to know that, if the need for it arises, the partnership can be extended. 
  • Remain available (preferable) - Software development work is rarely finished once the platform is built. In most cases, the team is expected to remain on-call to offer maintenance services and perform updates necessary to keep the software up and running. Considering this, it is smart to check whether the co-sourcing partner will be able to offer their services for an extended period and if so - in what capacity.  

It all boils down to developing a deeply rooted professional relationship where both parties will be equally committed to achieving the same level of excellence while working towards the same goal.

For software development projects, co-sourcing is a unique opportunity to gain a sustainable competitive advantage by elevating the levels of performance and productivity with minimal sourcing risks and lowered investment. 

Now all you need is the right partner. 

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