Selecting your team’s approach to leave management is a high-stakes decision these days. Whether you choose insourcing, co-sourcing, or outsourcing, your pick will determine your team’s ability to satisfy compliance requirements, deliver a high-quality employee experience, and stave off burnout.
Modern leave management is a challenging task for several reasons. First, there’s the problem of volume. More than half of HR leaders (53%) reported a rise in leave requests in 2025, according to to AbsenceSoft research. Of those, 66% said requests grew by more than 20%. But as caseloads swell, leave managers aren’t seeing headcount or resources grow accordingly.
HR is getting busier, which means it’s getting more difficult to manage a leave program successfully. Errors creep in. Paperwork falls through the cracks. Employees get frustrated, and leave managers start to feel stressed out.
That’s why your choice of leave model matters so much. With the right approach and the proper set of tools, you can tame your caseload and begin to manage your program strategically. In this article, we’ll examine insourcing, outsourcing, and co-sourcing and give you a few tips on how to determine which model is right for your team.
Why Choosing the Right Model Matters More Than Ever
When it comes to managing leave, there are three models: insourcing, outsourcing, and co-sourcing. Employers are split somewhat evenly between these three camps. According to a DMEC survey, 45% of employers insource, 24% outsource, and 32% co-source.
Employers used to choose between these models based on staffing. Larger teams chose to insource because they had the headcount to handle leave in-house. Smaller teams tapped vendors to get the job done.
Today, staffing isn’t the only factor determining HR’s choice. Employers must choose a model based on their team’s ability to satisfy compliance requirements and meet employee expectations.
Organizations must choose the model that enables leave managers to deliver leave effectively, compliantly, and compassionately. But the model itself matters less than the technology and expertise behind it. Whichever model you choose, you must make sure it’s grounded in purpose-built leave technology and leverages human expertise when it counts.
In the sections that follow, we’ll explore how each model works, the technology involved, and the pros and cons that accompany the approach.
Struggling to find the right approach? Download our Guide to Evaluating Leave Solutions to learn how to navigate the leave solution marketplace and determine the right approach.
Insourcing with Purpose-Built Technology
What is insourcing? Insourcing is a method of leave management where HR manages the entire leave process internally, from intake to return to work.
Who is insourcing for? Insourcing works best at organizations with strong internal HR coverage, direct visibility needs, and a culture-driven approach to leave.
Insourcing is a popular form of leave management. According to AbsenceSoft research, 79% of organizations manage the Family and Medical Leave Act (FMLA) in-house, making it the dominant leave management model. Nearly three-quarters of respondents (74%) said they use the same approach for leaves covered by state law and company policy.
The success of insourcing varies dramatically, depending on the tools employers use to implement it. Some employers attempt to insource leave management using spreadsheets, shared inboxes, and email threads. This is a manual approach that creates compounding compliance risk. It also hurts the employee experience, as it often leads to mistakes and delays.
Other organizations repurpose tools that are already in their HR tech stack. Using an HRIS for leave administration is slightly more sophisticated than a stack of sticky notes, but it lacks depth. While these tools help HR track leave more accurately, they don’t usually offer custom policy support, eligibility calculation for overlapping laws, or resources for accommodations.
Insourcing is at its best when achieved with technology built for leave management. Purpose-built platforms make insourcing genuinely scalable. In fact, teams that use dedicated leave software report up to 66% less administrative time per case, according to AbsenceSoft research.
Here’s the bottom line: Insourcing is a great option for many organizations, as long as it’s implemented with the right tools. Without a purpose-built platform, leave managers can get overwhelmed and create compliance liability. Leave management software equips HR to handle high-volume programs with consistency, compliance, and compassion.
Check out AbsenceSoft’s Comprehensive HR Guide to Leave Management Software, which explains how to find the best absence management platform for your organization.
Outsourcing to a Third-Party Administrator
What is outsourcing? Outsourcing is a method of leave management where an organization partners with a third-party administrator (TPA) or insurance carrier that manages leave administration on the employer’s behalf.
Who is outsourcing for? Outsourcing works best at organizations that need immediate relief, have limited internal HR coverage, or want a partner to fully own the leave process.
There are a few obvious advantages to outsourcing. It provides relief to busy teams immediately, solving mounting concerns about capacity. It also provides external compliance expertise. Finally, it supplies structured processes that transform leave programs from messy to strategic.
As with any other model of leave management, technology matters. A vendor is only as good as its tech stack. A TPA that runs on spreadsheets or legacy systems won’t deliver accuracy or consistency, even if its team is full of seasoned experts. Best-in-class TPAs deploy purpose-built platforms and CLMS-certified specialists to manage your leave program with consistency and care.
If you’re considering outsourcing your leave program, be sure to vet potential partners thoroughly. Ask questions like:
- Do you use a purpose-built leave platform?
- How do you handle multi-state compliance?
- Is your reporting fast and reliable?
Outsourcing can significantly reduce the amount of time and attention your organization spends on leave management. But it’s worth remembering that these programs almost always require an internal coordinator. Someone at your organization will need to handle complex cases and may need to administer company-specific policies.
Want to learn more about the advantages and disadvantages of partnering with a TPA? Take a look at AbsenceSoft’s Guide to Third-Party Leave Administration.
Co-Sourcing, and Why It’s Harder Than It Looks
What is it? Co-sourcing is a leave management model where internal HR handles some parts of the leave process while an external vendor supports other parts. Organizations typically split duties by function, leave type, or case complexity.
Who is co-sourcing for? Co-sourcing is most common at organizations with medium HR coverage. These organizations usually need extra support but don’t want to invest in the proper tools for insourcing or outsource their entire program.
Co-sourcing is appealing, at least on paper. It allows for flexibility and shared responsibility. Busy leave management teams can get some relief while keeping high-touch cases internal.
But many organizations attracted to co-sourcing fail to recognize the problem this model introduces. Co-sourcing requires strong structure. Roles must be clearly defined, and both parties must work from the same technology foundation.
Most of the time, neither one of these conditions is fully met, leading to several failures. Cases fall through the cracks. Employees get conflicting information from their in-house HR reps and external leave managers. Compliance gaps grow unnoticed until a complaint surfaces.
But misalignment isn’t the only risk to accompany co-sourcing. Organizations considering this model must be on the lookout for vendors that use manual processes. Some vendors will say they offer co-sourcing platforms that look like purpose-built systems. But what they actually use are software interfaces layered over human effort. This means that important processes like determinations, documentation, and communication are being handled by people using tools that aren’t built for leave complexity.
Organizations co-sourcing with vendors like these may think they’ve built a modern program. But when something goes wrong, they realize that they lack the compliance controls and audit trails necessary to protect themselves. Accountability is blurry and the employer will be at risk.
If you’re considering co-sourcing, know that it can work. But the model requires a commitment to a shared platform, explicit ownership of every process, and a defined escalation path. If the vendor you’re considering cannot tell you where their software ends and their people begin, that’s a red flag you should pay attention to.
How to Choose the Right Model
Insourcing, outsourcing, and co-sourcing each offer distinct advantages and disadvantages. It’s critical to select the model that will best serve your organization’s goals. As you prepare to pick a leave management model, ask yourself the following questions:
- How much has leave volume grown at my organization over the past two to three years?
- Does my HR team have consistent coverage across all shifts, locations, and states?
- How many states have active paid leave or job protection laws affecting my workforce?
- Where are the current friction points in the employee experience?
- How much visibility and control does my organization need over individual case decisions?
Sixty percent of organizations plan to invest more in leave management in the coming year, according to AbsenceSoft research. If you’re among the HR leaders looking into partners to improve your organization’s approach to leave, it’s important to understand the technology they’re using. Ask vendors to describe how their platform works, how their technology supports compliance, and how their approach furthers the employee experience.
Your Next Step Toward a Stronger Leave Program
If you’re considering a new approach to leave management, you’re probably experiencing some frustrations with your current method. Your team might be stretched thin. You might be dissatisfied with your current TPA. Or maybe you’re just trying to make your current arrangement more consistent.
It’s important to pay attention to these pain points. As you consider different leave models, make sure you begin with an honest assessment of where your current program is breaking down and what your organization wants to accomplish. Knowing where you are and where you’d like to go will help you identify the model that’s right for you.
If you’d like to learn more about choosing between insourcing, outsourcing, and co-sourcing, download AbsenceSoft’s ebook, The HR Leader’s Guide to Evaluating Leave Solutions. You can also book an appointment with one of AbsenceSoft’s CLMS-certified specialists to see how our platform can support your team.
FAQ on Leave Management Outsourcing
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Leave management outsourcing means partnering with a third-party administrator (TPA) or insurance carrier to handle some or all of your organization’s leave administration on your behalf. Rather than managing FMLA, state leave, and company-specific policies internally, you hand that responsibility to an external vendor with dedicated leave expertise. It is one of three common models, alongside insourcing and co-sourcing.
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Insourcing means your internal HR team manages the entire leave process from intake through return to work. Outsourcing means a third-party vendor handles leave administration on your behalf. Co-sourcing splits responsibilities between your in-house team and an external partner, typically by leave type, function, or case complexity. According to a DMEC survey cited in this article, 45% of employers insource, 24% outsource, and 32% co-source their leave programs.
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The primary advantages are immediate capacity relief, external compliance expertise, and structured processes that bring consistency to a program that may have grown unwieldy over time. For HR teams managing rising caseloads without additional headcount, outsourcing can be a practical way to stay compliant and protect the employee experience without burning out your staff. According to AbsenceSoft’s 2026 State of Leave and Accommodations report, more than half of HR leaders saw leave volume increase last year, with 66% reporting growth of more than 20%.
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Before signing any agreement, it is worth asking: What leave management platform do you use, and is it purpose-built for leave? How do you stay current with changes to state and federal leave laws? What is your process for multi-state employers? How do you handle company-specific leave policies? What does your reporting look like, and how quickly can I access data? Who is my point of contact, and what are your SLAs for case response times? The answers will tell you a great deal about whether a vendor is truly equipped to manage your program or simply promising they are.
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No. AbsenceSoft serves both direct employers managing leave in-house and the TPAs and PEOs that administer leave on behalf of their clients. Many leading third-party leave administrators run their programs on AbsenceSoft, which means their clients benefit from the same purpose-built compliance engine, case management workflows, and reporting tools that in-house teams rely on. Whether you insource, outsource, or co-source, the technology foundation is what determines whether your program can scale, stay compliant, and deliver a good experience to employees.
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Ask directly. Good questions include: What platform do you use to manage cases? How does your system handle overlapping federal and state leave laws? Can you show us your reporting capabilities? How are compliance updates built into your workflows? The best TPAs can give specific, transparent answers to all of these. Some of the most capable TPAs in the industry run on AbsenceSoft, which means they are administering leave through a platform built specifically for compliance complexity, not adapting a general HR system to do a job it was not designed for.