Outsourcing vs Insourcing

Outsourcing vs Insourcing

Overview

Every business has to determine whether they should perform a services in-house, or outsource that particular service to an outside vendor. Many companies are realizing that outsourcing allows them to cut costs, save valuable time, increase messaging capacity and restore focus to core business operations. To outsource or not to out source, that is the question…

Outsourcing

Outsourcing is when you hire a consultant, services provider, or agency to manage a portion of your business

Companies are beginning to outsource everything from monitoring firewall devices to watching access control lists and handling email security

Reason to outsource work:

Benefits

  • You are able to bring in an expert for a defined period of time to perform a task without committing to them long term
  • You may save thousands of dollars by not committing to an annual salary and benefits
  • For long term needs, such as fulfillment, marketing activities, or customer service, you gain operational efficiencies and skills that are difficult to replicate in-house

Disadvantages

  • You’ll need to find an affordable and high quality service provider, which can be time consuming
  • The cost of working with the right agency may be too high
  • Good service providers tend to be very busy

In-Sourcing

If a service is provided in-house a company must:

Benefits

  • The biggest benefit of in-sourcing is building your own team for operational functions
  • You control the provider’s time, activity, and quality
  • Most companies try to maintain the core operations that they believe will differentiate their business in house
  • A primary advantage of in-sourcing is increased control.
    Companies have more control over the time, resources and results of the work
  • Companies can develop and execute their own plan in a specialized area.
    The company can integrate a new or growing specialization into the organizational structure and develop reporting procedures, monitor progress and make adjustments as necessary

Disadvantages

  • If your team doesn’t have the skill levels or expertise required it may end up costing more to get them up to speed
  • A primary disadvantage of in-sourcing is the lowest-cost factor.
    Developing nations with large populations centers and growing business and industries are prime grounds for outscoring.

    Such processes include distribution and call center support.

    Labor in these countries is often less expensive and can drastically cut costs for larger corporations that wold have to hire hundreds of workers to operate warehouses or man phone lines

  • Another common disadvantage is that it takes a company’s focus away from core business activities

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