BUILDING YOUR DEPARTMENT BENCH STRENGTH: BENEFITS OF CO-SOURCING
Updated: Feb 9
Organizations are faced with the challenge to increase operational efficiency while reducing costs and retaining the personnel they need to be strategic. Talent shortages and the resource drain associated with recruiting, onboarding, on-the-job training and continuing education have many organizations looking for a more efficient and practical approach. Having the flexibility to allocate resources to align with organizational objectives is imperative. Strategies such as co-sourcing and outsourcing can help fill gaps and meet growing demands of the department.
Generally speaking, co-sourcing is when an outside professional services firm performs anything from a single departmental function to almost every function in the department, with the ability to scale based on fluctuating needs. With higher turnover and work-from-home workforces, many departments are readily turning to outside firms to address their staffing concerns.
As organizations evaluate the bench strength of their function, they should consider how the department is organized.
· Is it staffed with the right number of resources?
· Are team members in the right roles to be successful?
· Do they have the skills required to succeed in a dynamic environment?
Determining when to co-source or outsource services
Maintaining specialized department resources and the expertise to manage everything in house may not always be the most judicious or cost-effective approach. Organizations may prefer to work with an outside vendor or consultant as part of a co-sourcing or outsourcing arrangement. According to BDO’s 2021 Tax Outlook Survey, outsourcing specialized work (tied with supply chain restructuring) was cited by tax executives as the top resilience strategy they planned to use in 2021.
A flexible co-sourcing arrangement can scale services up and down as needed based on the demands of the department, allowing internal talent resources to focus more time on value-enhancing activities. Taking routine and repetitive compliance tasks off the plate of top performers can help create a path forward for them in the organization, improving engagement and retention. With the right arrangement in place, the organization not only benefits from cost savings but gains access to an advisor who stays current with regulatory and legislative changes and can consult on organizational strategy.
An organization may decide to pursue a co-sourcing arrangement when:
· Experiencing an inability to fulfill strategic priorities due to resource constraints
· Encountering gaps in specialty areas or technology
· Going through a system implementation or integration
· Experiencing turnover or difficulty hiring the right talent
· Wanting to reduce time and costs spent on recruiting, training and onboarding
· Desiring flexibility to scale resources based on fluctuating workloads
· Undergoing a merger, acquisition or divestiture/spin-off
· Facing headcount reductions for budgetary or other reasons
Establishing an outsourcing or co-sourcing arrangement
When embarking on an outsourcing or co-sourcing arrangement, organizations should consider what type of work to outsource and for what length of time. An assessment of the current state of the department can help identify and prioritize where there is potential for improvement and the top areas of impact to co-source.
While areas to outsource or co-source will vary based on the organization, compliance projects with repetitive tasks and/or a high volume of work may be a good place to start. Organizations may decide to start with a short-term project to meet an immediate need before determining what the long-term strategy should look like.
In addition to the type of work, it is also important to consider how the work will be managed and delivered. Streamlined processes and an established method for communicating and sharing information is essential for success. In a co-sourcing arrangement, the use of common technology platforms makes it easier to collaborate across teams.