Outsourcing and insourcing are two terms that you will be hearing frequently associated with business processes. These two methods are commonly used by people for completing different processes related to their business. If you are not yet familiar with these two terms, we provide a short comparison between them to give you basic knowledge about them, so that you can decide which is the best option for your business.
Insourcing and Outsourcing
Insourcing can be referred to as the process of completing the tasks related to your business by your own employee, whereas, outsourcing is the process of having someone outside of your organization, who is not an employee of yours, complete your business processes. This could be a consultant or an outsourcing company.
Both outsourcing and insourcing have their own merits and demerits. Hence, through this article, we list some of the important information regarding these two for helping you to distinguish between them.
Advantages of Insourcing
Many business owners choose insourcing over outsourcing because of the enormous number of benefits it carries. When you insource your business, you can have good control over it. For example, if you hire a new employee by yourself, then you can give them training based on your needs and specifications, i.e., you can set guidelines about their work and the tasks they have to complete, etc., but this may not be possible when you outsource the work of hiring and training employees for you.
Another advantage is that an employee would feel more ownership and pride in their work, when you hire them in-house and they will show more dedication and honesty in their work. An employee will have a sense of responsibility when doing the work for their own organization, therefore, they will take good care in completing the works.
Another factor is the loyalty that an employee will feel towards the organization they are working, whereas the employee of an outsourcing firm maynot be that much loyal to your business.
When you do work internally, you can be more flexible with the work. It is possible for you to employ changes if needed and also to respond to changes quickly. This may not be the case with outsourcing, as your processes will be done by other people and it may be difficult for you to closely monitor the works they are doing. Hence, it may be difficult to find out if there are any changes needed and to respond to it immediately.
When you go for insourcing you can choose to customize the processes based on your company’s specific requirements. However, when you outsource your business, the outsourcing companies will also have other clients and they will have a standardized process that is common to all the clients. Therefore, it may not be possible for you to customize these processes based on your particular needs.
Also, insourcing will help you to accommodate your new clients easily, whereas this can be a tedious process if you opt for outsourcing. You might have to pay extra for adding new clients in outsourcing, whereas in insourcing you will not have to incur any additional charges.
Disadvantages of Insourcing
Even though insourcing has a lot of advantages it also comes with some disadvantages too. The first and foremost problem is that hiring an additional employee for doing a specific task can be much more expensive than business process outsourcing. If you are hiring an employee you will have to also train them which an additional expense. However, when it comes to outsourcing firms, they will have trained professionals who can do your works efficiently at a low cost.
If the work cannot be done by a single employee, you will have to hire other employees for doing the same work, which can be really costly for you. But an outsourcing firm will be able to do all your works without you having to pay additional cost.
Advantages of Outsourcing
Business process outsourcing has become a flourishing industry over the past few years. Many small businesses are choosing to outsource one or more of their business processes because of the wide range of benefits this provides. Outsourcing the processes and tasks associated with your business are less expensive than hiring an in-house employee.
Also, the level of expertise you will get is more when you outsource your business, as the tasks will be handled by experienced professionals who have great knowledge and skills in this field. Therefore, you will get a better outcome and better profit.
Disadvantages of Outsourcing
The major issue associated with outsourcing is the lack of control you get over your business process. Your works will be done outside your organization, so that it may not be always possible for you to constantly monitor the works for ensuring the quality.
Also, the outsourcing companies will have some pre-set standards, and they may not be willing to change it for fitting your specific requirements. Another problem is that the employees of an outsourcing firm may not be as loyal as in-house employees.