Outsourcing & Co-Sourcing: Which Is Right for Your Business?
Conventional wisdom holds that it is often most efficient to keep all roles in house—but this is not always the case. If your organization keeps hitting the same internal roadblocks or is looking for a new way to optimize processes, alternative solutions like outsourcing or co-sourcing could prove more efficient.
Alternatives to insourcing free up resources and allow finance and accounting (F&A) departments to prioritize core operations, while leveraging external solutions like specialized talent and advanced tools to streamline your workflows and increase value. With more companies adopting fully remote or hybrid-work models, business leaders are fast warming up to the idea of adopting remote outsourcing relationships with third-party providers and hybrid approaches to co-sourcing.
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Outsourcing as an Ongoing Strategy
Outsourcing is often viewed as an interim solution to fill critical roles during staffing and leadership changes – that is, short-term and people-focused. In actuality, it is becoming increasingly common for organizations to develop long-term partnerships with third-party providers that optimize internal resources and align needs with external resources (people, technology, or a combination of both).
Rather than an option to leverage in a time of need, outsourcing is a viable option any time an organization is looking to strategically enhance and refresh processes.
Scenarios where outsourcing an F&A function is a good option:
- Segregation of duties – When you need someone other than internal staff to manage or perform a process, such as account reconciliation or treasurer duties. This minimizes opportunities for fraud and provides checks and balances on your team’s work. Plus, you’ll gain greater confidence in the accuracy of your financial reporting.
- Special Expertise – For example, when you need the expertise of a skilled accountant, but not a full-time employee. Acquiring special expertise for your organization could strategically evolve into an ongoing relationship, such as an outsourced controller to oversee F&A activities. By outsourcing an expert, you’ll gain necessary skills without the cost of investing in a full-time employee.
Staff vs Systems
F&A departments can find themselves in a position where they have the right staff to manage their workloads, but not the right systems to manage these tasks efficiently. Encountering this scenario, you have an opportunity to rethink a specific function of your F&A department, rather than focusing on adding to or outsourcing roles. For example, you may consider that a third-party provider could implement a solution that uses software or automation to manage a time-consuming manual process, freeing up your team to focus on higher-value work.
Technology Tip: Companies like Botkeeper provide a software solution that uses machine learning to automate your accounting data entry and reporting, freeing up time for you and your team to do more meaningful work. A trusted accounting and advisory partner can help your organization implement efficiency-building tools like this.
Outsourcing can provide an organization with fresh perspectives and best practices, opening the door for optimization and opportunities to scale business.
Co-Sourcing to Maintain Control & Flexibility
In a co-sourced model, internal staff work with external professionals to perform key functions. This model may be attractive to organizations focused on developing an ongoing relationship with a third-party advisor. A co-sourced model is best for your business if you seek a “happy medium” between insourcing and outsourcing, as your organization maintains a high degree of control over the approach to doing business and day-to-day F&A functions.
Co-sourcing could be particularly attractive for your business if your needs are likely to fluctuate throughout the year. Co-sourcing provides more flexibility than other approaches, as services can be scaled up or down as needed based on demand. It’s also possible to move from co-sourcing to outsourcing as your needs change.
Choosing the Right Outsourcing or Co-Sourcing Partner
Depending on your industry, organization size, or business stage, your needs will vary. From assessment and optimization of your current accounting systems and processes, to CFO-level consulting to help guide major business growth decisions, the right professional partner will help you move forward efficiently and with confidence.
We welcome your questions on what mode of sourcing is right for your business. If your ongoing or seasonal accounting demands are exceeding your team’s capacity in tax or audit prep assistance, reach out to us.
Contact REDW Client Advisory & Accounting Services (CAAS) Senior Manager Caren Cacciatore below. In 18 years of experience providing results-driven accounting and advisory services, she’s helped a variety of business leaders of small business, mid-size, and multi-billion-dollar corporations to bridge gaps in their operations.