Glossary · Operations
Co-sourcing
Co-sourcing is an operating model in which a fund manager keeps ownership and oversight of a function, such as fund accounting or reconciliation, while an external specialist team does much of the work alongside the in-house staff. It sits between running everything in-house and handing the whole function to an outsourcer.
In private equity and other private markets, co-sourcing is common for fund accounting, investor reporting and capital calls. The manager’s finance team keeps control of judgement areas, approvals and the relationship with investors and auditors; the co-sourced team prepares the books, schedules and reports to agreed procedures.
Co-sourcing helps managers scale without adding fixed headcount, cover peaks such as quarter end, and keep knowledge in-house. It works best with clear responsibilities, shared systems or controlled access, and regular review. For a fuller discussion see our article on strategic co-sourcing in fund accounting.
Co-sourcing vs outsourcing vs in-house
| Model | Who does the work | Who keeps control | Best when |
|---|---|---|---|
| In-house | Manager’s own staff | Manager | Scale justifies a full team and systems |
| Co-sourcing | Manager’s staff and an external team together | Manager | You want control and capacity without hiring |
| Outsourcing | External provider | Provider runs it; manager oversees | You want a whole function run for you |
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