Every business is different; your needs depend on your organization’s structure, industry, and goals. While there is often a debate around insourcing vs. outsourcing consulting services, the answer usually depends on the company’s individual circumstances.
What is Insourcing?
Insourcing services are those that are done in-house by the company’s employees. All the work is done internally. The advantages usually include cost-cutting, quality control, intellectual property control, and fast delivery.
What is Outsourcing?
Outsourcing, on the other hand, means engaging services from other organizations to help complete the work. As outsourcing companies can specialize, the advantage is usually that the work is high quality. For example, an organization might outsource 24/7 IT support that provides thorough, expert assistance that an in-house team does not have the resources for.
What are the Major Differences Between Insourcing and Outsourcing?
There are no one size fits all solutions to insourcing and outsourcing debates. We’ll take you through the insourcing vs. outsourcing pros and cons so you can make the right decision for your business.
Quality Control
Insourcing offers a higher level of quality control than outsourcing services. If all processes are done onsite by trusted organization members, companies can fine-tune practices exactly how they want.
This can also save time—as the company can oversee every aspect, they can make additions or tweaks to the process before the final product is finished. Whereas outsourcing might result in restarting the project after completion if it does not meet quality standards.
Intellectual Property
With insourcing solutions, you have a greater command over employees and resources. Therefore, you also have greater power over controlling your intellectual property. Insourcing has minimal risks in terms of your intellectual property being leaked or shared with third parties. You have control over who has access to your data.
However, most organizations do not find this to be an issue. As long as you partner with trusted third parties and create robust contracts, there is little likelihood that your intellectual property is at risk.
Innovation
This is where a hybrid approach may be particularly valuable to your organization. Keeping core elements in-house will enable your team to have the space to create innovative solutions as they will have control over the entire process.
However, outsourcing administrative and IT consulting services can free up space within your company to focus on what really matters. If you divide your focus over too many different departments, you lose the flexibility to innovate.
Outsourcing consulting services provides companies with expert assistance while in-house teams can concentrate on innovating other areas.
Reduction in Costs
Insourcing is often considered to be the cheaper of the two methods. However, strategically planning your outsourcing can often reduce overall costs. An outsourcing business typically pays higher fees for specialist work from third parties.
However, they save money on training in-house teams and purchasing equipment. Plus, this specialist work is likely to be of a higher quality. Therefore, while the upfront cost may be more, outsourcing may eventually yield a higher profit for the organization.
Communications
Outsourcing inevitably creates a longer chain of communication. The company’s head delegates to the team in charge of outsourcing (usually supply chain management), who then communicates with the third party. Within the third party itself, there is another chain of communication to their own employees. Inevitably, miscommunications will happen along the way.
Miscommunication might waste time and money. However, insourcing tends to minimize this risk where company leaders communicate directly with their employees. Plus, there is more room for a back and forth to clarify instructions when everyone is within the same organization.
Reputation
When it comes to considering your brand values, you might prefer one or the other strategies. Consumers tend to prefer localized businesses that create jobs in the area. Outsourcing might put customers off as they think of it as ‘foreign’ or unknown.
Yet, this is something to be balanced. If you fear your customers will reject a company that outsources, consider how much more traction your reputation will gain from the improved performance outsourcing provides.
As long as your organization runs smoothly and offers high-quality products, it is unlikely consumers will have a problem with your outsourcing. They will likely only notice it when things go wrong.
Fast Delivery
Outsourcing can increase the time it takes to deliver a project by about four times. The additional minutes involved in administration, the outsourced employees adapting to your process, and the more convoluted communication chain can mean that tasks are not completed by the deadline.
Insourced teams tend to have prior knowledge of the company and its systems and might be quicker at delivering the job. However, speed does not necessarily guarantee quality. And this factor depends on what the outsourcing team is hired to do. An outsourcing web development or IT consulting service is an expert on various systems and programs and able to help most people.
Training Your Own
Insourcing indeed allows companies to train their own employees from the start. They are more likely to get a well-rounded experience that prepares them to advance within the company. However, you also have to consider that you must pay for these training costs.
Time Zones
Outsourcing abroad might result in conflicting time zones or cultural clashes. These problems can be negated by thorough preparation and careful communication. Plus, with improvements in video conference services, outsourcing abroad has never been easier.
However, you still should bear in mind that insourcing does not create issues of time zones. Whichever you choose depends on your business model.
What is the best option for my business?
As stated, there is no right or wrong answer. Outsourcing can be an excellent asset for your company and allow you to grow and fill experience gaps. However, insourcing invests in your company’s future by training in-house employees.
When outsourcing, ensure that you and your partner business clearly communicate what the aims and values are. Mutual collaboration will ensure better success. When insourcing, make sure you regularly check your expenditure, market factors, trends, and commercial considerations.
About the Author: Nora Erspamer is the Director of Digital Marketing at New Charter Technologies, a group of companies specialized in managed IT support services. She is an experienced marketer and sales strategist with a demonstrated history of working in various technology industries. Skilled in strategic campaign development, lead generation, and marketing automation software. Website: https://www.newchartertech.com/it-consulting/ .
