Find The Right Operational Fit In Today's FSO–FSP Landscape
By Life Science Connect Editorial team
The outsourcing discussion in clinical operations has matured far beyond choosing between full-service outsourcing (FSO) and functional partnerships (FSP). Today, sponsors operate along a continuum shaped by internal readiness, governance discipline, portfolio complexity, and the need for real-time operational visibility. During a recent Clinical Leader Live titled “FSO or FSP? What Works, When, And Why?”, Lois Kelly (National Down Syndrome Society), Samir Shah (Shah Pharma Consulting), and Jeremy Weitz (Biogen) outlined how organizations are making these decisions now, and why the most important drivers have little to do with model labels.
Alignment And Integration Determine Whether Any Model Works
Kelly emphasized that the success of any outsourcing structure hinges on internal alignment far more than on the model itself. Her early experience with embedded teams revealed how subtle cultural disconnects can undermine performance.
“In one of my first implementations, teams worked side-by-side with the sponsor but weren’t included in simple things like holiday schedules or company events,” she said. “That exclusion hits morale hard, and it absolutely affects quality.”
She noted that clarity upfront matters as much as execution. “You need scope, governance, communication pathways, and performance expectations defined before launch. If you skip that, you’re going to pay for it later.”
Sponsors often focus on the structural design while underestimating the cultural and communication elements required to sustain it. Integration, in other words, isn’t a soft-skills concern — it’s an operational requirement that determines whether teams function as a united unit or a set of disconnected contributors.
Emerging Sponsors Are Adopting Embedded Approaches With Intent
A significant share of Clinical Leader’s audience represents small and emerging companies; many of whom still worry that embedded or hybrid structures are “too large pharma” for them. Kelly pushed back on that assumption. “Smaller companies have to be smart about spending,” she said, “But that doesn’t mean an embedded approach is out of reach. With a clear list of needs, a disciplined RFP process, and a cross-functional review, you can find a right-sized version that matches your goals.”
This shift among biotechs is accelerating for several reasons. Headcount caps imposed by investors or parent companies often force teams to externalize specialized roles earlier than planned. Many emerging sponsors also want stronger direct relationships with investigative sites, especially in competitive therapeutic areas where credibility and speed matter. Modular or function-first approaches — often beginning with project management, study startup, or data management — allow these companies to gain operational maturity without building full internal departments.
In smaller organizations, governance must be exceptionally tight. A single departure can slow or stall an entire program, which is why many biotechs are using hybrid approaches to extend their internal muscle without overstretching lean teams. These shifts mirror themes discussed in Clinical Outsourcing Observations And Predictions, which included Shah’s perspective on the industry’s growing use of blended operating structures.
The FSP Shift Is Structural, Not Cyclical
Shah has long argued that the industry’s movement toward embedded approaches isn’t a pendulum swing — it’s structural. He observed that the shift is being reinforced by the way large pharma invests in operating platforms, data systems, and AI-enabled efficiencies.
“What’s happening now isn’t a pendulum swing,” he said. “It’s a structural shift. Large pharma is investing heavily in operating platforms, AI, and process efficiency, and the ability to operate on one integrated system offers a strategic advantage that other approaches can’t match.”
He added that operating data supports this trend. “Across top pharma, the steady-state is roughly 80% FSP-derived and 20% FSO. That’s not a forecast; that’s how operating models are actually built today.”
Shah noted that this evolution is visible in procurement behavior. Sponsors increasingly provide scenario-based RFPs and request multiple operating configurations — a clear sign that they no longer see FSO and FSP as fixed lanes, but as variable levers within a broader operating design. The work he referenced, including the Tufts-aligned taxonomy effort, continues to influence how companies evaluate options, ensuring common definitions and expectations across internal teams and external partners.
M&A activity and the pressure of looming patent cliffs also contribute to the structural shift. When portfolios expand rapidly or pivot into new therapeutic areas, sponsors often accelerate their move toward embedded models to centralize knowledge and stabilize operational control during periods of strategic change.
How Procurement Leaders Assess Value — Not Vocabulary
Weitz framed the decision in terms of value, not model terminology. Before debating structure, he said, companies must define what they need to achieve.
“You’re not choosing a model,” he said. “You’re choosing the value you want — time, cost, efficiency, quality — and then determining which approach supports that.”
His second observation highlighted the internal accountability required. “When you operate with embedded teams, you’re on the hook. If something isn’t going right, the accountability sits with you. That’s why internal readiness matters more than the model itself.”
Weitz also pointed to the industry’s push to stay closer to sites, which is a priority that aligns naturally with models offering more direct communication and faster operational response times. In an era of real-time data expectations, multilayered communication chains introduce operational drag. “If you need to understand what’s happening at a site today,” he said, “calling through layers of intermediaries is an inefficient way to work.”
His comments reinforce themes from his earlier Clinical Leader article, The Role Of The CRO Is Changing — Why?, which outlined the growing expectation that providers offer transparency, flexibility, and aligned operating cultures rather than rigid service models.
Oversight, Cost, And Organizational Discipline Drive Outcomes
No discussion about outsourcing decisions is complete without examining cost. But the panel agreed that rate-card comparisons between structures are misleading.
Shah explained why: “Rate cards alone are a terrible way to judge cost. You have to think in terms of total cost of ownership. A large pharma adds variable cost when it brings in embedded teams. A small biotech with no infrastructure is adding variable cost and building that infrastructure. Those are completely different financial calculations.”
Weitz added that without utilization planning, clear metrics, and disciplined governance, the perceived financial efficiency of an embedded approach can erode quickly.
During the session’s live poll (see chart below), attendees overwhelmingly identified oversight and performance tracking as their greatest friction point. The panelists noted that these issues rarely stem from the model itself. Instead, they reflect unclear expectations, inconsistent governance, and reactive oversight structures that become visible only after problems surface. Many sponsors are now redefining performance metrics to align with embedded or hybrid structures, distinguishing between tactical oversight (task-level work) and strategic oversight (portfolio-level transparency).
The conclusion was consistent across all three panelists: no outsourcing model inherently solves oversight issues — organizational maturity does.
