Outsourcing is a business model that involves contracting outside companies to perform tasks for the business. Business owners usually apply this business practice because of its various benefits, particularly its cost-saving features. On the other hand, insourcing is a business practice in which work that would otherwise have been contracted out is performed in house. Insourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced.
What is the difference between outsourcing and insourcing?
Let’s start at the basics. I could just provide you a definition but I am more of a practical person, so better start with an example. Let’s say your company has a lot of communication and marketing related tasks ahead. You are a product-focused company, you don’t have room for launching a campaign and pushing sales. You have two options ahead: either, you could hire an employee of your firm to handle these tasks, or you could outsource it to a company that specializes in communication and in online or offline marketing.
Note: this decision shouldn’t be taken lightly.
Pros and cons
Let’s follow up on the example I just gave you above. If you go for insourcing and you hire someone inhouse you will have an advantage that I will call: ownership. You will have an overview of all the processes that are designed for your company. Everything will be tailor-made to your needs and also the employees could be motivated to do their new tasks. And if the success falls on you and your coworkers, you will own it, because it was the team who fought for it.
So, what happens when you outsource these tasks? The company that you rely on probably has more standardized processes than you think. They have an excellent portfolio and a key to success. This is not as customized as you first want it to be, but here is the thing: the possibility of failure is very low. You would think that an outside company doesn’t take full responsibility and loyalty to you and you might be right: but they work with processes that are already proven to be working.
What makes a bold difference: the costs. Sometimes in-house training and the risks that come with it can be too high. What if you will need more human resources later? What if some unwanted failures will enter the front door? Start again? Hire other people? When you go with outsourcing, you can lay back and you can be already sure about the outcomes and final amount to be paid. In this case, maybe you won’t have the pride of “I did it”, but in the end? You know… it doesn’t even matter.
Long story short: before making the choice, assess the situation, and consider all the facts and possible outcomes.
Still unsure about the benefits of outsourcing and insourcing?
Both insourcing and outsourcing provide benefits, but the difference comes down to a company’s desire to control quality or control costs. Many entrepreneurs view outsourcing as the ideal cost-cutting measure, while others see insourcing as a more efficient way to meet company standards. Despite the arguments favoring the above-mentioned business models, some companies opt to enjoy a mixture of both. Book a free consultation with us to learn more.