Insourcing and outsourcing are both processes used to acquire labor for specific functions or projects of a business or a company. Both are also used by different companies when starting new projects to grow their business.
Insourcing, as the name implies, refers to the delegating of projects to departments or individuals inside a company. On the other hand, outsourcing employs another company’s expertise to perform services or functions for a company.
Although most companies combine the two, there are some situations where businesses can choose to insource some functions or outsource them.
In those cases, here are things a business can take note of when considering which one to use.
Control and Monitoring
Between outsourcing and insourcing, a company has better control when they insource, especially with management.
One, since insourced departments or people, work within the same office as the business owner or managers. Moreover, it is easier to monitor your in-house workers’ progress. In case a problem arises, it is easier to intervene. Now, with outsourcing, you are putting your trust in another company’s manager and workers to deliver the service or product you want from them. Moreover, you have less control over how an outsourcing company handles your business’ functions or projects. However, it gives you less headache with decision making.
If you’re company already has the needed infrastructure and equipment to do new projects. Then insourcing can save you money. However, if you don’t have the necessary equipment and space for starting new projects, outsourcing is the cheapest and best way to go.
Moreover, when it comes to the cost of labor, outsourcing is cheaper. For example, you might need to recruit and hire new employees for projects you will insource. Imagine the amount of money and time you will spend on that, plus the overhead cost you have to pay once they’re already part of the company.
You mitigate and lessen your business risks when you outsource. Whereas when you insource, the bulk of the risk is put upon your business alone, an outsourcing company takes a lot of those risks.