There’s been a lot of talk lately about Outsourcing versus insourcing. Which one is the best for a business? 

A common question asked by many business owners is “should I outsource my work?”

When you’re outsourcing, you’re spreading your work out. It’s a way to grow your business without hiring staff. However, rather than outsourcing many organizations are now considering insourcing some of the critical tasks. As companies grow and their functions become complex, there emerges a need to use alternative methods depending on the business objectives.

In this article, you will find out about outsourcing and you will also find out what are the advantages of outsourcing over insourcing.

What is Outsourcing?

Outsourcing is a business practice in which a company hires a third party service provider to perform tasks or manage both core and non-core operations. 

There are many ways to outsource business processes.  External companies called service providers entrust their employees to perform the agreed tasks or services on site, in the contractor’s own facilities, or in external locations. Usually organizations outsource information technology services, customer service and call center services. Many organizations also outsource other non-core activities, human resources, and financial functions such as bookkeeping and payroll. 

What is Insourcing?

Insourcing is a technique that is opposite to outsourcing. While insourcing, the organization hires staff to work internally. We can consider it as bringing a foreign employee at lower wages rather than assigning the work to an external agency.

Companies might decide to insource for several reasons, such as retaining control or. They might want to retain control over need for specialized skills.  For example, in order to maintain control, the company may decide to manufacture certain critical components and depend on insourcing. 

Outsourcing vs. In-sourcing

Let us begin by understanding the gains both techniques bring to an organization.

• Benefits of insourcing – Insourcing uses the existing assets of an organization and does not require collaboration with a third party service provider. Rather than involving any external organization, you are assigning tasks to someone inside your company. Insourcing may also require you to create new departments within the company to handle complex projects.  

  This method allows organizations to have greater control over the project. They can set guidelines and enjoy greater flexibility in terms of customization.  However, insourcing could be costly in the long run and involves huge expenses related to recruiting, hiring, training, and infrastructure.  Besides, insourcing is not scalable and hence might prove to be unfavorable for large scale projects. 

• Benefits of outsourcing – Outsourcing brings in professional skills and technology from an outside BPO company. It results in huge cost savings and helps organizations save on recruiting, hiring, training, and other related costs. A reliable service provider supports the organization to increase its efficiency and also bring scalability in the process.  By outsourcing companies can also increase their market reach and increase their sales and conversions by leveraging the skills of the service provider.

  Outsourcing is also an excellent strategy to deliver superior customer service. Third party service providers bring the capability to provide multilingual customer support and thereby allow organizations to serve customers across the globe.  It also enables round the clock support whereby customer’s issues are resolved in a timely manner

Conclusion

Organizations often choose to outsource. It can be cheaper and also gives them the option to outsource the work that does not add significant value. Although outsourcing can bring advantages, it’s important to ask the following questions: What does the business need? In order to get a clear answer, the business owner needs to go back to the basic needs of the company and find out what it requires. 

Outsourcing is more cost-effective and allows companies to improve overall quality of customer service. Outsourcing can also give companies the opportunity to expand their market reach. However, in projects where security concerns and control becomes an issue, insourcing might be a better option.  The choice depends on the type of services being outsourced, the unique services you’re looking to accomplish, and your own company culture.

If you are looking for a trustworthy outsourcing partner, contact SBL today. Our team is always ready to discuss your requirements and suggest the best solution.