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 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:
The task is highly specialized and requires expert skills or systems, such as graphic design, website development, payroll, PPC campaigns, human resource compliance, etc
The task requires a large facility, specialized equipment, or operational efficiencies.
Fulfillment operations are frequently outsourced because of the need stock large amounts of inventory and manage it efficiently.
The task is seasonal or may need to scale up or down quickly.
Customer service is frequently outsourced because those providers are better quipped to handle a high volume off calls on demand.
The cost of hiring in-house is prohibitive for the amount of work
This is usually because the tasks needed to fulfill are not full-time and you simply can not afford to hire a highly skilled persons for a part time position
The operation or task is temporary or short term
You may need the task done for the short term, such as seasonal fulfillment, tax preparation, a website redesign, or upgrading your infrastructure
- 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
- 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
If a service is provided in-house a company must:
Locate a qualified employee
Pay employee wages and benefits
Provide required technology items such as computers, phone and internet access
Train the employee
Provide the employee a physical workspace
- 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
- 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