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21. What is co-sourcing?

Although the media often refers to various outsourcing relationships where the participants have an ongoing collaboration as "co-sourcing," The term has a very specific definition. EDS (who coined this term) describes it as a relationship where the supplier becomes a partner in planning an organizational transformation of the buyer's company. The supplier goes in on an enterprise-wide level and provides major consultancy work in BPO. The parties sign an outsourcing agreement for the supplier to run particular processes, at the same time implementing the BPO changes. The BPO in co-sourcing is a joint effort of both parties, as the decision-making process during the relationship. Thus, ownership and control of the process is not turned over to the supplier, as in other outsourcing relationships. Co-sourcing also differs from other outsourcing in that the buyer's core processes are involved, along with its important but non-core processes. Additionally, the supplier's compensation is risk-based. You can read more about co-sourcing in the white paper on contingency-based contracts, which is available at Outsourcing Research.

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