outsourcing vs insourcing

Outsourcing vs Insourcing

Several entrepreneurs and freelancers believe in the theory of getting things done by themselves or within their team, if they have one. Others believe in the power of external delegation, giving out company tasks to outsiders. Both of these are business strategies that have been used over the years, with a lot of arguments surrounding which one is better.

You’ll find out soon enough. First, you should understand the technical term and meaning of each strategy.

Outsourcing

This is the process of transferring certain business activities to external industries. These activities can include but are not limited to administrative tasks, IT management, marketing and human resource management.

To learn more about outsourcing, click here.

Insourcing

This is a practice where business activities are performed within the operational structure of the organization. This means every task is assigned to a team member of a department, which is already a part of the business.

Now, to answer the question: To outsource or not to outsource?

Differences Between Outsourcing and Insourcing

Costing

There is a significant difference in the amount of money spent when tasks are outsourcing and when they are assigned internally. Outsourcing is by far a cheaper option compared to insourcing. When outsourcing, you only pay for specific tasks assigned based on the level of technicality and the duration of hours it will take. Insourcing on the other hand means you have to hire someone that shows up everyday, possibly train them to deliver to your satisfaction, pay salaries monthly, and also provide other workplace benefits like health insurance, for every single member of all the departments you might decide to have.

If you do the math, you’ll be surprised by the huge financial gap between the two methods.

If you want to cut costs, outsourcing is your best bet for that.

Level of Expertise

Outsourcing means hiring the right set of professionals to handle your business needs. Insourcing means assigning tasks to already present members, regardless of how talented they are as regards the assigned tasks.

You see the difference, right?

When outsourcing, you expect nothing but quality and optimum delivery because that’s exactly what you’ll be paying for. However, with Insourcing, there’s a higher possibility of countless corrections and dissatisfaction before you finally get what you want. This is not necessarily the fault of your employees or teammates, there’s a limit to the strength of each person, and deciding to hire one expert for every field required for the success of your business is likely going to drown you in debt.

So, as regards getting quality work done for non-core aspects of your business, outsourcing is usually the way to go.

Level of Control

Like the financial implication, there’s a huge difference between the amount of control you’ll have when you’re outsourcing tasks or insourcing them. As you may have guessed, insourcing gives you more control over how tasks are being executed. It also means you can evaluate processes and correct them to suit your preferences.

Outsourcing on the other hand, gives you minimal control over the process and techniques employed to execute tasks. This means if you don’t hire a trustworthy outsourcing firm to handle some part of your business, you might be at risk of watching many things go wrong without being able to stop them from escalating.

Imagine you’ve been known for great customer service and you decide to outsource that task. If your outsource firm of choice handles your customers poorly, that will be detrimental to your business.

Therefore, for activities or tasks that are directly involved in the life and growth of your business, it is a good idea to assign them to someone whose actions are guided by your business rules.

Communication Errors

Outsourcing is prone to a lot of errors in communication, especially since it is mostly done remotely. Imagine having to communicate with the first responder in the outsourcing firm, and when your order finally gets to the actual person(s) that’ll execute them, some important details have been lost along the way. That would suck. This problem can be easily fixed or completely avoided if the outsourcing firm makes sure you’re on the same page, and can keep you in the loop as work progresses.

Insourcing does not face this problem because everyone is in one location, is aware of what’s happening in real time, and can easily ask questions for clarity. Also, mistakes will be easily spotted and corrections can be made early enough without much inconveniences.

Productivity

Outsourcing increases productivity, especially if you’re a small or medium business owner. When you assign non-core business tasks to outside companies, it gives you more time to focus on your core product/services and you can continue to deliver value to your target market. Insourcing in this case, will be time-consuming, frustrating and possibly detrimental to your business growth. Knowing your strengths and what’s important to your business will help you decide if insourcing is good or bad for you.

Development and Innovativeness

Insourcing has the upper hand in this aspect. When tasks are handled within the organization, it gives you the privilege to monitor every move, identify areas of lapses, and find ways to fix those problems. This might eventually lead to production or generation of better, original and innovative ideas on how to execute assignments and get better results. Insourcing also allows for growth of employees and teammates, and the evolution of better talent in your organization.

When you outsource, you have no idea what is going on, what barriers were encountered, and how they were fixed. This ultimately limits the ability to think outside the box and come up with new ideas.

Outsourcing and Insourcing clearly have their advantages and disadvantages, which is normal for every situation you might find yourself.

Deciding on whether to adopt a method depends on your business goals, financial capacity as well as the products and services that you offer.

Insourcing is a better option when you have enough talent, and are worried about communication barriers, control, or delivery time.

Outsourcing is best when you’re sure you could use some expertise, and more focus time for the soul of your business.

When you outsource to Side Hustle, you don’t get held back by communication errors or control issues. You will be offered exclusive access to the right team of talented individuals that will make your business grow seamlessly.

What could be better than that? Find your dream team now.

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