After his playing retirement he helped coach the Cowdenbeath squad before being appointed team manager in October 2006, succeeding Mixu Paatelainen. Welsh was sacked by Cowdenbeath in June 2008, following their relegation to the Third Division. In 2009, Welsh won a compensation claim against Cowdenbeath for his dismissal as manager in June 2008. The club stated that they had dismissed Welsh because he had incurred touchline bans due to misbehaviour during matches, but the judge ruled in his favour because the club had taken no action at the time and had dismissed him for unconnected reasons.