The Rise of Co-sourcing: Staying Agile During the Pandemic

The nearly instantaneous economic recession triggered by the Covid-19 shutdown has wreaked havoc on businesses large and small. The hotel sector is among the hardest hit. The industry surpassed one billion unsold room nights for the first time in history. For comparison, there were 786 million unsold room nights during the Great Recession of 2009.

The existing dramatic fluctuations in the global economy forced companies to evaluate and look for ways to reduce their vulnerability. The need to maintain high levels of agility, business flexibility, and organizational ability to be innovative and explorative has become an imperative practice. To mitigate risks, businesses continue to operate in reduced staff sizes with the remaining teams assuming additional roles, while others outsourced personnel to lower operational and labor costs.

However, as businesses adjust strategies and pivot towards economic recovery, the relationships between customers and their outsourcing providers are evolving from being transactional towards a spectrum of relationships based on various degrees of interdependence. The growing interest in a symbiotic collaboration is driving the shift to “cosourcing” as businesses choose to support each other and share the risks.

The Difference Between Outsourcing and Co-sourcing

The word outsourcing is often feared by many employees. Many people tend to associate outsourcing with job loss. While this is proven to be a misconception, the difference between outsourcing and cosourcing are distinct.

 Outsourcing is when you hire a person or business to fulfil a task or project for you. It is the go-to answer when you realize you don’t have the manpower, knowledge, or time to complete a task or project in-house. You are generally responsible for managing the people you outsource to, though to what degree depends on the task or project and the person (or people) you hire to do the job.

While it retains all the benefits of outsourcing, Cosourcing is about building a dedicated team. And then allowing them to be a part of an expanded department for another company. It is combining services from within and outside a business to achieve the same goal in the short, medium, and long term. A cosourcing partner will further evaluate and seek to understand the company’s culture, future growth, the resources available, and the skills that need to be filled.

Five Advantages of Co-sourcing  

The growing inclination towards cosourcing has increased over the years. This is because this sourcing model has the edge over the traditional outsourcing approach as it provides a sustainable competitive advantage. Whether you need solutions for design and development, sales, accounting, and telecommunications, co-sourcing is the new norm.

1.     Focus on Core Business: You don’t need to hire full-time team members, you don’t need to worry about relocating anyone, and if you hire the right person or company, you can rely on their business processes to get you the results. You can lower the costs of back-office or administrative functions, and at the same time, still have control over the critical parts of the client relationship. The businesses you co-source will also already have testimonials from existing partners, so you can move quickly knowing you can trust the person or organization to deliver on their promises.

2.     Access to Expertise & Knowledge: You can expect a shortened learning curve as there is no ramp-up time required to execute business’ new projects and initiatives. The team is strictly aligned with your strategy and vision. The team retains everything they have learned and understands the products or services to avoid an outsourcing team. They bring a wider range of experience and access to intellectual property.

3.     Synchronized Deliverables: Team members gain a sense of ownership; hence, there is heightened accountability for both failures and successes. There is control over the quality of resources, leading to improved predictability of timeliness and work quality. This comes from the fact that there’s a partnership between the company and the co-sourcing vendor. The methodologies, policies, and standards that are unique to the business will be followed.

4.     Minimize Sourcing Risks: There is shared responsibility between you and your cosourcing partner, and you have the same goal in mind–to deliver quality products or services to the end customer. It is also finding the balance between in-sourced and outsourced support and combining them in a way that will fit the need and the circumstances the business might be currently facing.

5.     Increase Transparency: The goal is to develop a long-term relationship with your business partner where there is trust between you and your cosourcing provider to achieve outstanding service that you would probably only associate with a partnership rather than a contracting arrangement. Once the cosourcing partner fully understands the scope of the project and the company’s vision, they will develop an agile plan fit for your business.

It is apparent that the trend is continually shifting from simply cutting costs to mitigating risks associated with outsourcing. The approach of Co-sourcing is gaining more and more traction among businesses as the need to minimize business vulnerability, companies will also be seeking for relationships with increased strategic alignment, shared risks, shared value and greater value exchange.

Now is a Good Time for New Perspectives

Businesses experiencing economic difficulties these days may find the concept of cosourcing a bit contrary, but it’s a strategy that businesses can utilize to draw new ideas. Understandably, businesses that were impacted by this crisis are suffering significantly. But a crisis is a great opportunity.

The pandemic has been the catalyst for many businesses pivoting to serve a new industry, market, or market segment. Of course, while this comes with the opportunity to bring in more revenue, it takes manpower.

While bringing on new people full-time allows you to completely dictate how their working hours are spent, you also need to onboard them, ensure they are the right fit for your company culture, and enroll them in payroll and all your benefits. If you find your new hire isn’t the right fit, it’s a headache and costly to let them go.

Hospitality, an industry that’s experienced the most devastation, the costs of staying visible in the market when you’re closed or only operating at 10-15% occupancy can be high. Yet, the risk of taking action to grow can feel as large as the risk of not taking action to stay visible and relevant. According to STRthe desire to travel remains strong as ever, and there is hope that science will triumph.

As more vaccines are distributed in the coming months, there is optimism that life will begin to return to normal by the second half of 2021. While social distancing and staying safe continue to be the priority, a survey produced by Destination Analysts shows that 58 percent of Americans are in a travel readiness state of mind. Right now, 80.2 percent of Americans have plans for one or more upcoming trips, with July still looking like the peak travel month this year. While nearly a quarter of the next road trips Americans will take will be within the next 3 months, the majority of American travelers still anticipate their very next air trip to be after June.

With that said, what is your company’s strategy now and how are you preparing for the recovery and rebound! 

Along with our clients and colleagues APLBC in these times of uncertainty, staying nimble and keeping a positive mindset really strikes home as we try and navigate this new normal. How we mobilize ourselves in this time of change will define how successful we are when we come out the other side.


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