It seems like yesterday when outsourcing their software and application development projects to specialist partners was the modus operandi for most South African companies, writes Matt Chittenden, business development manager at DotModus.
The outsourcing boom of the early 2000s paralleled the rapid growth of software development, which itself paralleled the rapid growth of e-commerce and the Internet.
However, with the rapid adoption of technologies that change the way we do business, companies have found that co-sourcing is now a better way to maximise the value of business-critical projects.
While co-sourcing shares many of the same benefits as outsourcing, it eliminates most of the downsides. That’s because, unlike the ‘arms-length’ approach of an outsourcing contract, co-sourcing brings the action far closer to home. When you outsource a project, you’re handing the responsibility of managing and delivering the project to the outsource team. When you co-source, you share the responsibilities and project deliverables with the co-sourcing team.
Outsourcing and co-sourcing start from the same pain point of any business: lack of resources. It’s expensive and time-consuming to onboard extra resources, especially for short-term or once-off projects – not to mention we’re seriously lacking qualified skills in South Africa.
The biggest difference between the two models is control and accountability. With outsourcing you have little of both, while co-sourcing lets you retain complete control of your project. – and therefore, be more accountable for project delivery.
But the differences – and benefits – of co-sourcing go even further. Take a major media or fintech company, industries that regularly make use of our services. In each case, these companies are responsible for highly sensitive information about their clients. They have their own security systems and policies in place, and follow strict regulations they’re required to adhere to by law.
In an outsource arrangement, bridges would need to be built between these companies and their outsource provider, possibly compromising their systems, and certainly reducing visibility for those in charge. In contrast, as a co-sourcer, our teams become integrated with those of our clients. Our team members get client-domain emails. Our systems take on the login profiles and access requirements of their systems. Any information we generate on our systems is immediately visible to their teams and management.
A good co-sourcer will also insist on learning and adapting to your business culture, and utilise the right people that gel with your management style. Co-sourcing implies that the same resources will work with your teams on multiple projects, which allows a repository of knowledge about your business and products to be built up over time – significantly reducing the traditional learning curve that outsourcing brings to the table.
It all adds up to better use of resources, better management of costs and a significantly lower risk of project failure.
Of course, co-sourcing is not all unicorns and rainbows, and there are times when outsourcing does make more sense. Large government projects, for example, would likely be too complex and too cumbersome to co-source, and the gaps between management expectation and delivery too large to bridge.
Some highly specialised projects could also be too demanding to co-source, and hiring dedicated skills would be prudent. Ultimately there is still scope for both outsourcing and co-sourcing and the secret is to choose the best methodology for your business and your project.
But for the vast majority of digital transformation projects where working with a collaborative team using Agile methodologies is now the norm, co-sourcing offers a viable new alternative. As is Agile, co-sourcing is underpinned by efficient responsiveness to change, collaborative partnerships and effective communication. You can control operating costs, improve business focus, maintain strategic control and free up internal resources to be used where they’re needed most.
In this way, your inhouse and co-sourced team members become one unit, focused on achieving the same goals and delivering the same shared outcome.