The rise of co-sourcing: time to re-evaluate the operating model

The traditional private markets operating model is under strain. Increasing complexity, rising investor expectations, and growing regulatory pressure are forcing managers to rethink how their businesses are structured.

Recent industry data highlights the disconnect: only a small proportion of GPs believe their current model is fully fit for purpose, while the majority acknowledge the need for optimization.

As firms scale, diversify strategies, and expand across jurisdictions, the burden on internal teams continues to grow. Infrastructure that once supported a simpler model is now being stretched across multiple funds, co-investments, SMAs, and continuation vehicles.

At the same time, LP expectations are rising. Transparency, speed, and accuracy are no longer differentiators but baseline requirements. Managers are expected to deliver more, with leaner teams, and without compromising control.
 

Co-sourcing: a pragmatic middle ground

Managers no longer need to choose between fully in-house models and full outsourcing. Co-sourcing offers a more flexible approach, allowing firms to retain control over core activities while leveraging external expertise to execute operational processes.

Demand is being driven by a few factors:

• Increased regulatory pressures

• Increased requirements for fast, accurate, and granular reporting

For many firms, maintaining a fully end-to-end internal operating model is no longer economical or necessary. Co-sourcing provides access to specialist expertise, reduces operational risk, and introduces greater flexibility into the model.

Why co-source (not just outsource)?

Outsourcing remains relevant for commoditized activities. However, co-sourcing is better suited to managers who want to maintain oversight, protect institutional knowledge, and stay close to their operations.

The model works particularly well where firms want 24/7 access to their data. This can help support knowledge-sharing and upskilling by allowing staff to work with external experts.

In addition, funds, administrators, and auditors can pool information into a single place. This has the potential to improve efficiency and support a firm’s wider operational resilience.
 

Who is co-sourcing for?

Co-sourcing is relevant across the spectrum, but it works particularly well for:

• Emerging managers who can gain institutional-grade support without building large teams
• Large managers who can flex capacity and access specialist expertise without adding permanent cost
   

How to approach co-sourcing

Successful co-sourcing starts with clarity. Managers should define which activities are truly core and where external support can add the most value. The right partner should feel like an extension of the team, not a separate provider.
 

The time to act is now

The pace of change in private markets is not slowing. Legacy operating models are increasingly misaligned with today’s demands. Managers need to focus their internal resources on what drives value: originating deals, managing portfolios, and delivering returns.

As market complexity increases and pressure on operating models intensifies, adoption will continue to accelerate.

For some, it will be a transitional step toward a more outsourced model. For others, it will become the long-term balance between internal ownership and external support.

To find out more about how Ocorian supports managers through co-sourcing and outsourcing, speak to one of our consultants and set up a conversation today.