Insourcing vs Outsourcing: Pros and Cons of Each - Time ...

Insourcing your workforce lets you establish better connectivity with the key members of your project. Since there's no intermediary in this ... InsourcingvsOutsourcing:ProsandConsofEachbyLaurenSoucySeptember8,2021Today,businessesoperateinglobalizedmarketsandhaveseveralwaystomanagetheirbusinessprocesses. Insourcingandoutsourcingaretwosuchsourcingpractices,eachwithitsownmerits. Butyoumaybewondering,whichone’sthebestfitforyourbusiness?Don’tworry. Ourdetailedinsourcingvsoutsourcingcomparisonwillhelpyoumakethatdecision. Inthisarticle,we’llgiveyouahead-to-headinsourcingvsoutsourcingcomparisonanddiscusstheirprosandcons.We’llalsodiscussthethreequestionsyoushouldaskwhendecidingbetweeninsourcingandoutsourcing. ThisArticleContains:(Clickonthelinksbelowtojumptoaspecificsection.)InsourcingvsOutsourcing:aDetailedComparisonWhatisInsourcing?WhatisOutsourcing?InsourcingvsOutsourcing:ProsandCons3QuestionstoAskBeforeDecidingBetweenInsourcingandOutsourcingHowtoManageYourInsourcedandOutsourcedTeamLet’sgetstarted.InsourcingvsOutsourcing:aDetailedComparisonBeforewegetintotheprosandconsofinsourcingandoutsourcing,let’sfindoutwhattheymean. A.WhatisInsourcing?Insourcingisabusinesspracticeinwhichyouassigntasksandprojectstoyourin-houseworkforce. Youcanassigntaskstoanindividualorateamofemployeesthatworkwithinyourorganization’sinternalinfrastructure.Insourcingalsoaccountsforthenewhireswithinyourorganization,aslongasyouincludethemonyourcompany’spayroll. Theseinsourcedteammembersusuallyhaveagoodunderstandingofyourcompanyculture,aswellasinstitutionalknowledgeaboutyourcompany.  Forexample,inacompanythatmanufacturesmotorbikes,employeeswhoworkoncorecompetenciessuchasmanufacturingandengineeringareinsourced. B.WhatisOutsourcing?Outsourcingisabusinessagreementthroughwhichyourcompanycanhireanothercompanytotakeoveraspecifictaskorproject. ThissourcingmethodisalsocalledBusinessProcessOutsourcing(BPO).Itgivesyouaccesstoanexternalorganizationthatspecializesinaparticularservice. Theseoutsourcingproviderstakeoveraprojectonyourcompany’sbehalf. Companiesusuallyoutsourcetheirnon-coreactivitiestooutsourcingproviders. Non-coreactivitiescanincludedifferentmarketingstrategies,suchasinboundmarketing,socialmediamarketing,digitalmarketing,contentmarketing,etc. Itcanalsoincludelarge-scalenon-coreactivitiessuchasoutsourcingsoftwaredevelopment,logistics,manufacturing,andsupplychainmanagement.Inourexampleofamotorbikemanufacturer,thecompanymayoutsourceanon-coreactivitylikedesigningitsadvertisingcampaign.  Nowtherearethreetypesofoutsourcing::Onshoring:Involvesoutsourcingtoacompanyoranindividualinyourowncountry.Offshoring:Outsourcingtoacompanyoranindividualinafar-awaycountry,usuallywithadifferenttimezone.Nearshoring:Outsourcingtoacompanyoranindividualincountriesthatareclosetoyours. Here’sacloserlookatthekeydifferencesbetweeninsourcingandoutsourcing:InsourcingOutsourcingLocationofOperationOperationsperformedwithinacompany’ssite.Operationsperformedatasiteownedbyanoutsideorganization.TypesofBusinessActivitiesCoreactivitiessuchasbudgeting,investing,etc.,arehandledbythein-houseteam. Non-corebusinessactivitiessuchasITservices,HRactivities,contentcreation,cybersecurity,etc.,canbehandledbyanoutsourcedteam.ControlOverOperationsExercisecompletecontroloveraspecifictaskorproject. Shareoperationalcontrolswithanoutsourcingprovider.CostRelativelyexpensiveduetohiringandtrainingcosts.Relativelycost-effectivebutmayinvolveanunforeseenexpenseorahiddencost.InsourcingvsOutsourcing:ProsandConsBothinsourcingandoutsourcingcanimpacttimemanagement,resourcemanagement,workdelegation,andcostsaving.Let’stakeacloserlooktounderstandwhereeachofthesebusinesspracticesscoresandwherethey’relacking.  A.InsourcingHere’sabreakdownoftheadvantagesofinsourcingyourworkforce,alongwithitslimitations. a.Pros1.BetterQualityControlInsourcingyourworkforceletsyouestablishbetterconnectivitywiththekeymembersofyourproject. Sincethere’snointermediaryinthisequation,you’llalsogetcrucialinsightsintoyourteam’sdecision-makingprocess.You’llbeabletotestandtweakyourprojectasandwhenitprogresses. Ultimately,you’llhavecompletecontrolovertheprogressofyourproject,andyoucanregulatethequalityofyourfinishedproduct. 2.IntellectualPropertyProtectionAleakinyourintellectualpropertycanputyourinvestments,research,andevenyourteamatrisk. Butthankfully,there’snoriskofaleaktoathird-partyvendorwhenyouworkwithaninsourcedteam,makingmanagingyourintellectualpropertyaneasiertask. 3.SmoothBusinessCommunicationWhileinsourcingyourteamforaproject,there’saminimalchanceofhavingamiscommunication. Yourteamisworkingoutofthesamelocationasyou,whichmakesface-to-facecommunicationaneverydaypossibility.Inadditiontoverbalcommunication,youcanusenon-verbalcuessuchasgesturesandfacialexpressionstoensurethatyourteamcommunicatesseamlessly. Butthisisequallytrueiftheinsourcedteamworksremotely.Afull-timecommitmenttoyourcompanyensuresthatyourinsourcedemployeesareavailableduringallworkinghours. 4.PositiveBrandImageInsourcingyourcompany’sworkforcecreatesjobsforlocals.Yourcompany’srelationshipwiththelocalcommunityimprovesasaresultofthis. Insourcingateamcanbeespeciallybeneficialifthejobrequiresyourcompanyrepresentativestotalktoyourconsumerbase.It’sidealtohirelocalswhowon’tfaceculturalbarrierswhilecommunicatingwithyourcustomers. Outsourcingservicescanimpactyourbrandimagenegativelyifpeoplefeellikeyou’retakingjobsawayfromlocals. b.Cons1.IncreasedCostsChoosingtoinsourceyourworkforcewillpushyourhiringandlaborcostshigher. You’llhavetospendcapitalon:Screeningandhiringeachnewemployee.Payingthemmonthlysalaries. Payingforbenefitssuchaspaidleaves,sickleaves,newworkequipment,etc.2.Time-ConsumingInsourcingaworkforceistypicallyverytime-consuming. Evenafteryoufindtheperfectcandidateforaparticularjobrole,you’llhavetotrainthenewemployeetohelpthemunderstandthescopeofyourbusinessfunctions. Additionally,implementinganewprocessforoperationsorestablishingdivisionsfornewprojectscanbeoverwhelmingforyourexistingteam. Yourteam’sfocusmaybedividedbetweendifferentdepartments,ultimatelyhinderingtheirproductivity.  3.LackofWorkloadFlexibilityWorkloadflexibilityallowsyouremployeestoadjusttheirworkloadsbasedonfactorssuchasprojectdeadlines,unforeseendelaysindeliverables,etc.Takingonanewprojectusuallyrequiresyourorganizationtohavethisflexibility,asyourteamwillneedtotakeonadditionalresponsibilities. Workloadmanagementisaneasytaskintheoutsourcingworld,asanoutsourcingpartnercanprovidethecapacityyouneed.Theflexibilityofthissortisdifficulttoestablishwithinyourinternalworkforce. Yourexistingteamwillalreadybeengagedinlong-termprojects,andthey’llmostlikelylacktheflexibilitytotakeonmoreworkimmediately.Asaresult,yourin-houseteammayfeelburdenedandunmotivated.   Readtoknowmoreabouthowtomanageyourteam’sworkloadandavoidburnout. 4.HeadhuntingCostsHiringanemployeeisexpensiveandtime-consuming.However,hiringspecialistsathigherlevelsisevenmorechallengingandcanresultinheadhuntingcomplications. Nottomention,thecosttothecompanyforaspecialistmayfarexceedyourbudget.Themorespecializedyourjobprofilebecomes,themoreyouridealcandidatewillcostyou. B.OutsourcingLet’snowtakeacloserlookattheadvantagesandlimitationsofoutsourcing. a.Pros1.LowerLaborCostsandBetterScalabilityOutsourcingcansignificantlyhelpyoucontainlaborcostsoverthelongrun.Apartfromthecostofscreeningandonboardinganemployee,you’dalsosaveontrainingcosts. Outsourcingalsoletsyouscalemuchmoreeasilythaninsourcingbecauseofthenumberofresourcesandpeopleyouhaveaccessto. Forexample,let’ssayyouhavetoscaleupaproject,andyouneed20extraworkhoursperweektoachieveyournewtarget.These20extraworkhourseachweekwon’tphaseyouroutsourcingfirm,butitwouldputamassivestrainonyourpermanentemployees.2.AccesstoBetterTalentPoolYourinternalteammayhaveskillsetsinseveraldifferentareasofbusiness. However,employeesofanoutsourcingcompanyusuallyspecializeinaspecifictask. Hiringsomeonewiththislevelofexpertiseistime-consumingandmightbetooexpensiveforyourbottomline.Butsinceoutsourcinginvolvesashort-termengagement,it’saneasierandcost-effectivewaytoworkwithexperts.  3.Fast-TrackedDeliverablesMostoutsourcedprojectsarestrictlytime-bound.Andbecauseoftheavailabilityofmanyexpertemployees,anoutsourcingvendorcandeliveryourprojectneedsevenonatightdeadline. Additionally,youcanenhanceyourcompany’sproductivitybyhavingyourin-housestaffandyouroutsourcedteamworkondifferenttasksforthesameproject.You’llhavetwoteamsworkingefficientlyonthesameprojectinshifts. Andbecausemostoutsourcingcompanieshaveemployeesworkingroundtheclock,youcanusuallyalsoget24/7technicalsupportwithoutextrapayment.4.FocusonCoreBusinessActivitiesOutsourcingnon-corebusinessactivitiesisanextensivelyusedbusinessstrategy. Itletsyouandyourteamfocusonthecorecompetencyandthecorefunctionofyourbusiness.Atthesametime,anoutsourcedteamcantakecareofyourmundanenon-corebusinessactivities. b.Cons1.QualityControlIssuesHandingqualitycontrolovertoanoutsourcingpartnercanbeconcerningandchallenging.You’llbedependentonyourpartnertoensurethattheycarryoutyourprojectsuccessfully. Additionally,ifthisisyourfirsttimeworkingwiththeoutsourcingprovider,you’llhavetoputinextraefforttobuildtrustandestablishacordialrelationship. 2.SecurityConcernsDatabreachesarenotnew,andevensomeofthebiggestcompaniesworldwidehavefallenpreytothem. It’sonlynaturaltobeconcernedaboutentrustingyourcustomerdataandintellectualpropertytoathird-partyserviceprovider. Sure,contractscanensurethatyourserviceprovidertakessecuritymeasurestosafeguardyourdata.However,youmaynotbeabletokeepaclosewatchtoconfirmthis. 3.CommunicationBarriersWithoutsourcing,youmaynotbespeakingdirectlytoalltheteammembersworkingonyourproject,andyouroutsourcedteammaybedoingremotework.There’slittleyoucandotohelpthemgainuniformunderstanding. Additionally,ifyou’reoutsourcingtofar-awaycountries,youmayalsofacechallengesduetodifferencesintimezonesandcultures. Youroutsourcedteammayfacedifficultieswhileextendingcustomersupporttoyourlocalaudienceduetothesebarriers.4.LackofBusinessKnowledgeIfyou’relookingforahighlyspecializedskill,youmaystruggletofindaserviceproviderwhounderstandsthenuancesofyourbusiness. It’smorechallengingtofindtherightsupportfornichebusinessesasoutsourcingcompaniesdon’tusuallyspecializeinthem.3QuestionstoAskWhenDecidingBetweenInsourcingandOutsourcingWe’vegonethroughtheprosandconsofoutsourcingandinsourcing. Bothsourcingmethodscangiveyourbusinessacompetitiveadvantageandensureyourworkisefficientlydistributed.Butyoumaystillbefeelingundecidedoverwhatsourcingpracticeyoushouldchoose.So,we’lldiscussthreequestionsthat’llhelpyoumakeyourchoice.  1.What’sYourTopBusinessPriority?Whileoutsourcingyourtaskscangiveyouimmediaterelieffromaheavyworkloadandhighoverheads,insourcinghelpsyoubuildasolidsetofresourceswithinyourorganization. Choosingbetweenthetwosourcingoptionscomesdowntowhatyourultimatebusinessgoalis. Ifyou’relookingtogetimmediateassistancewithprojectsandtrimdownyourcosts,thenoutsourcingwouldbeagoodfit.However,insourcingisabetteroptionifyou’relookingtoexpandyourorganization’slong-termcapabilitiesandresources. 2.HowTime-SensitiveareYourBusinessNeeds?Ifyourbusinessneedshaveatightdeadline,optingforanoutsourcingsolutioncouldbeyourbestoption. Outsourcingserviceprovidersworkontime-boundprojectsandcancatertoyourneedsatshortnotice. But,ifyouhavetheluxuryoftime,insourcingwilleventuallyprovetobealucrativeinvestment. Bytrainingandinvestinginyourinternalteam,youcannurtureexpertiseandscaleyourorganization’sgrowthfromwithin. Youcanalsouseacombinationofinsourcingandoutsourcingthatbenefitsyourbusinessmodel. Forinstance,youcanhireanin-housemarketingteamtomarketyourwebsite.Atthesametime,youcanoutsourcedeveloperstohelprebuildyourwebsite. 3.HowEstablishedisYourBusiness?Outsourcingimmediatelyeasestheburdenonyourexpenses.That’swhyit’sagreatchoiceforarelativelysmallbusinessorastartup.Ifyou’reanewbusiness,youcanchoosetoworkwithanotheragencyuntilyou’rereadytotransitiontoinsourcing.However,ifyou’reanestablishedbusinessowner,youhavemoreflexibilitytochoosebetweenthetwosourcingoptions.  HowtoManageYourInsourcedandOutsourcedTeamWhetheryouchoosetoinsourceoroutsourceyourteam,youmaybeworriedaboutmanagingtheirproductivity. Anoutsourcedteamwillbillyoubythehour,whichiswhyit’simportanttoensurethey’reproductiveduringtheirbillableworkhours. Withanin-houseteam,youmaybeworkingremotely,andteamcollaborationinadistantworksettingcanbedifficult.Evenwhileworkingoutofthesameoffice,keepingtrackofeveryemployee’sproductivityischallenging. Don’tworry.Wehavesomeusefultipsthatcanhelpyoumanageyourinsourcedoroutsourcedteam.  Toensureefficientcollaboration,youcanusecommunicationtoolslikeSkype,Slack,Jira,etc.,andcommunicatekeyprojectinformation.Readmoreonthetoponlinecollaborationtoolsforremoteteamsin2021. AnothertipthatcanhelpyoumanageyourteamistouseatimeandperformancemanagementtoollikeTimeDoctortomonitoremployees’workinghours. What’sTimeDoctor?TimeDoctorisapowerfulemployeeproductivitymanagementtoolusedbysmallandbigcompaniestoenhancetheirteam’sperformance. YoucanuseTimeDoctorto:Trackemployeetimetoaccuratelycalculatebillablehours.Manageprojectsandbudgetsformaximumefficiency.PayyourteamdirectlyusingpaymentmethodslikePayPal,Gusto,etc.Usedetailedproductivityreportstodeterminewhetheryourteamisproductiveorunproductiveatwork.IntegratewithyourexistingbusinesstoolslikeAsana,Trello,etc.,usingTimeDoctor’srobustChromeextension.WrappingUp Insourcingandoutsourcingarebothbeneficialsourcingchoices. Insourcingcanhelpyoubuildlong-termresourceswithinyourorganization.Ontheotherhand,outsourcingcanhelpyoucutcostsandfinishyourprojectsonashortdeadline. However,boththesesourcingchoiceshavetheirsetoflimitations. Thecostsofheadhuntingandtrainingcanmakeinsourcingchallenging.Withoutsourcing,youmayfacedifficultieswithensuringdatasecurityandexercisingqualitycontrol.   Youcangothroughthedetailsinthisarticletounderstandtherightsourcingsolutionforyourneeds.LaurenSoucyLaurenSoucyistheVPofMarketingforTimeDoctor,theworld’sleadingtimetrackingandproductivitysoftware.Shehas15+yearsofexperienceinmarketingatfast-pacedcompanies.HerfirstpassionisSEO,shecan’tstartherdaywithoutcoffee,andsheenjoysspendingtimeatthebeachwithhertwoboysandherhusband. GetmorestufflikethisInyourInboxSubscribetoourmailinglistandgetinterestingstuffonremoteworkingandproductivitytoyouremailinbox.Werespectyourprivacyandtakeprotectingitseriously.previouspostWhatGoesintoaBPOAgreement:12PointstoIncludenextpostHowToStartACallCenterin2022(Processes,Tips,Tools)RelatedPostsTheUltimateOutsourcedCallCenterPricingGuide(2021)VirtualAssistantCanada:TopServices,Costs&More(2022)10EasyWaystoImproveYourCallCenterQualityAssuranceRemoteandHybridContactCentersCouldBetheFutureoftheIndustryVirtualAssistantvsEmployee:WhichisRightForYou?HowtoStartaSocialMediaMarketingAgency(Steps&Strategies)ResourcesBusinessBlogProductBlogTeamProductivityBenchmarkingToolScreenMonitoringSoftwareEmployeeMonitoringSoftwareTimeTrackingforAgenciesResourcesforRemoteCompaniesAboutDownloadTimeDoctorCaseStudiesFAQsTimeDoctorReviewsIntegrationsPrivacyPolicyTermsofServiceWhatCanYouDoWithTimeDoctor?https://youtu.be/9NBBk10axME