Insourcing vs. Outsourcing: What's the Difference? - Support ...

While insourcing allows you to stick to the traditional way of doing things within your organization, outsourcing gives you the ability to ... Skiptothecontent Home OurSolutions Insights Let’sTalk Careers CloseMenu Home OurSolutions Insights Let’sTalk Careers Insourcingvs.Outsourcing:What’stheDifference? Home>Insourcingvs.Outsourcing:What’stheDifference? Estimatedreadingtime:5min Overview Throughouthistory,companieshavedevelopeddifferentwaysofdistributingworkduetoanever-evolvingbusinesslandscape. Today,therearetwomainapproachesthatcompaniescanusetodistributelabor:insourcingandoutsourcing.Bothmethodsareviableoptionsforsourcingpeopletohelpyourunyourbusiness.However,onemayturnouttobemoreeffectivethantheotherwhenyoutakeintoconsiderationfactorslikecost,flexibility,andskillsexpertise. Readmoreaboutthesimilaritiesanddifferences,aswellastheprosandcons,ofinsourcingandoutsourcing,inthisinfographic. InsourcingandOutsourcing:SimilaritiesandDifferences Insourcingisthemethodofusinginternalresourcestoperformabusinessfunction.Unlikeoutsourcing,thereisnotransferofworktoanoutsideorganization. Insourcingandoutsourcingcancomplementyourday-to-dayoperationssincebothmodelsaimtoincreaseyourcompetitiveadvantagebymakingsurethatworkisdistributedcorrectlyandefficiently.Ultimately,though,you’llneedtochoosethebettersolutionforyourbusiness. ACloserLookatInsourcingandOutsourcing Contrarytowhatyoumaythink,outsourcingisn’tlimitedtothebusinessprocessoutsourcing(BPO)andinformationtechnology(IT)sectors—althoughstatisticssaythatalmost90%ofglobaloutsourcingfallunderthesetwocategories. Thesedays,youcanoutsourceanyjoborrole,includingmanufacturing,accounting,andevenresearchanddevelopment(R&D).Infact,R&Dbelongstothetopfivejobsectorsthatcompanieshavebeenoutsourcingsince2015. However,youcannotoutsourcefunctionsthatarecoretoyourbusiness.Corebusinessprocessesrefertothosethat: 1.Giveyourbusinessauniqueedgeovercompetitors Supposeyou’reamanufacturerofhomefurniture—tocomeupwithaproduct,youneedtosourcematerialsandcreatedesignsforit. Betweenthetwoprocesses,designingyourfurniturelineismorecrucialsinceitreflectsyourbrand’spersonality,soitonlymakesmoresensetodoitinternallywithyourcreativeteam.Meanwhile,youcanoutsourcethemanufacturingofyourfurniturepiecestoanothercompanythathasspecializedmachinerytoexecuteyourproduct. 2.Impactyourbusinessdirectly Anyactivitythatbearssignificantcontributionsorproducesresultsforyourbottomlineisconsideredacorefunction.Yourexternalqualitycontrol,forexample,hastocomplementyourinternalqualityassurance.Thegoalistoensurethatyouturnoutthebestproductsforyourcustomers,orthatyourservicesarealwaysalignedwiththecompany’sstandardsofexcellence.Youandyouremployeesaretheonlyoneswhohavecompleteknowledgeofthesethings,soitmaynotbewisetohaveanoutsideorganizationperformthecoretasksinqualitychecksforyourbusiness. 3.Involvetradesecrets Tradesecretsrefertoanyinformationorprocessthatgivesacompetitiveadvantageforyourbusiness.Itmaybeintheformofaproductformula,proprietarytools,orotherspecializedknow-howthatsetsyouapartfromcompetitors.Insuchcases,outsourcingisn’taviableoptionsinceyoudon’twanttosharethesetypesofinformationwithathirdparty. WhataretheBenefitsofOutsourcing? Apartfromprioritizingkeybusinessaspects,hereareotherwaysthatyourcompanycanbenefitfromoutsourcing: Itlowersyouroperationalcosts.Runningabusinessinvolvesdealingwithalonglistofexpenses—maintaininganofficespace,buyingequipment,payingemployeesalaries,etc.Outsourcingisaninexpensivewayofgettingallthesethingsdonesinceitallowsyoutousetheprovider’sexistingresourceswhilefreeingyouupfromthecostsofprovidinghealthinsuranceandotherbenefits. Itaddressescapacityissues.Atsomepoint,yourin-houseteammaynolongerbeabletoaccommodateormanagetheworkloadassignedtothem.Throughoutsourcing,youcandelegatesomeofthosetaskstoensurecontinuityinbusinessoperations. Itreducesyourtimetomarket.Inoutsourcing,there’salreadyanexistingteamandinfrastructurethatcancompletethemostimportantprojectsortasksforyou.Insourcingmayrequireyoutostartaseparatedepartmentordivisionfromscratchbeforeyoucanimplementnewprocesses. Itsupportseffortstoupscaleyourbusiness.Eventually,yourstartup/SMEwillhavetoscaleuporventureoutintonewmarkets.Outsourcingcanassistyouinformingasmallteamduringtheinitialstagesofyouroperationsandthenaddmorestaffwhentheneedarises. Itstreamlinesyouroperations.Sometasksmaybetootime-consuming,suchthattheyaffecttheefficiencyofyouroperations.Sincetimenotspentwiselyalsomeanslosingmoney,youshouldstartoutsourcingtasksthataren’thelpingyoumeetyourbusinessobjectives. Itimprovescustomerfocus.Itissaidthat54%ofcompaniesoutsourcetheircustomersupport,whichisoneofthekeydriversofbusinessgrowth.OutsourcinginthePhilippines,forexample,generallypromotesacultureofcustomer-centricity,soyoudon’thavetoworryaboutmeetingyourcustomers’expectations. Itleveragesworld-classtalentforyourbusiness.FromAsiatoEuropeandLatinAmerica,moreandmorecountriesareofferingoutsourcingservicesinawiderangeofindustries.Thesedestinationshaveapooloftalentwhoseskillsmaynotbereadilyavailabletoyou. Thisisespeciallytrueifyou’reinafieldwherethere’sashortageoflabor,perhapsbecauseit’sareasonablynewindustryorthepositionisnaturallyhardtofill.Infact,intheU.S.,about300,000positionsarefilledyearlythroughoutsourcing. Itprotectsyourbusinessinterests.Third-partycontractorsareboundtofollowaservicelevelagreement(SLA).SLAsareacriticalcomponentofanyoutsourcingcontractsinceitdefinesthescopeofworkthatyourproviderneedstodeliver,theagreedtimeline,performancemetrics,andpossiblepenaltiesfornotcomplyingwiththeSLA. MoreTipsinChoosingBetweenInsourcingandOutsourcing Thereisnousekeepingsomethingin-houseifyourorganizationdoesn’thavetheresourcesorcapabilitiestomanageitefficiently. Third-partyinvolvementdoesn’tnecessarilymeanriskingconfidentialityofcompanyinformationsinceyoucanalwayssetupaNon-DisclosureAgreementwithyouroutsourcingpartner. Youcantransitionfrominsourcingtooutsourcing,orviceversa,dependingonwhichismoresuitabletoyoursituation.Thegoalistopickupthebestpracticesfromeachmethodandapplythemtoyourbusinessmodel. Whileinsourcingallowsyoutosticktothetraditionalwayofdoingthingswithinyourorganization,outsourcinggivesyoutheabilitytoenhanceyouroverallbusinessstrategybygivingyouaccesstomoderntechnologyandotherinnovations. It’salsopossibletotryahybridmodelofdistributingwork,usingbothinsourcingandoutsourcingatthesametime.Forexample,youcanbuildanin-housemarketingteamtomanageyourcampaignsinternallyandthengotoanoutsidecontractorthatspecializesinwebsitedevelopment. KeyTakeaways It’sunderstandableifyou’restillundecidedaboutwhetherit’sbettertohaveyourownsetofemployeesperformallyourbusinessprocessesoroutsourcenon-corefunctionstosomeoneelse.Takethetimetoreflectonthepriorities,challenges,andresourcesthatyourbusinesscurrentlyhas.Fromthere,youshouldbeabletomakeaninformeddecisionwhetherornottooutsourceorinsource. Formoreoutsourcing-relatedquestions,youcanreachouttousanytimeatAsiaPremierOneSourcetoscheduleameetingwithourexecutiveteam. AsiaPremierisaboutiqueoutsourcingcompanyinthePhilippinesthatprovidesresilientsolutionsandservicesforyourbusinessneeds.YoucancheckoutthedifferentservicesweprovideonOurSolutionspage.Interestedinpartneringwithus?Youcansetanappointmenttoday! REQUESTFORACONSULTATION RecentPosts 14ImportantMetricsEveryE-CommerceBusinessShouldTrack December17,2021 CommonCustomerSupportPitfallsandHowtoAvoidThem December17,2021 BusinessDevelopment101:HowtoCollectandAnalyzeCustomerFeedbackE... December6,2021 ByAdrianAgawin |  May18,2020 |  Tags: businessoutsourcingbusinessprocessoutsourcinginfographicinsourcingoutsourcing ShareThisPost