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Simply put, in-source equates to sourcing contract employees on an as-and-when basis, outsourcing is self-explanatory, and co-source is working with others (on a project, for example).

When does one method prevail over the other? And what are the risks associated?

  1. In-source – we require certain skills that we do not possess and are prepared to take on the risk of delivery. Depending on the technical requirements of the work and hence risk to the entrepreneur, in-sourcing a team onto a project is a cost-effective manner to avoid the costs associated with full-time employees. A key risk is the availability of the skills when you require them, given that they have their own plans and hopefully, your needs align with there’s.
  1. Outsource – generally, this applies to low complex tasks that can be performed at low cost in alternate geographies. This option works well in a low-risk (typically data processing) service and where the skill base is abundant (and hence cost is low). The future risk seen by organisations outsourcing to the East is the significantly increasing prices as demand has escalated. A backup plan is key and critical.
  1. Co-source – essentially sharing of risk and reward! The alignment of values and project goals is key to ensuring two separate organisations deliver one result. The key issue in this model is managing the team toward a common goal and avoiding its own goals overriding those of the project team goals.

A combination of either or all can work – ensure you understand your project’s risks before you venture into one of the above. At the same time, the above can save high employment costs.