The Difference Between Insourcing and Outsourcing
What is Insourcing?
Insourcing is a business practice involving an organization using its own employees to complete tasks. Insourcing uses developed resources within an organization, rather than hiring a third party, such as a freelancer, to get the job done. Insourcing is performed within the operational infrastructure of the organization.
What is Outsourcing?
Outsourcing is the process of a company hiring an outside organization, also known as a third party, to complete work for them. Higher-ups in companies should be prepared to weigh the pros and cons of using outsourcing or insourcing for each specific task to decide which option makes the most sense.
The Difference between Outsourcing and Insourcing
Simply put, outsourcing and insourcing are two different ways that companies use to acquire talent to execute certain tasks. As the names suggest, insourcing is the internal method, while outsourcing utilizes outside sources.
Outsourcing Advantages
Outsourcing commonly uses foreign labor for non-essential tasks to save money. Another reason for outsourcing is if a company doesn’t have the resources for a job. Rather than starting a new department, or hiring and training new employees, companies may choose to outsource and save some time and money. A company does have the option to train an existing employee to do the job, but this may make that employee’s workload heavier. Using outsourcing, in that case, can avoid employee burnout and reduce negative behavior. Another possible advantage of outsourcing non-essential activities is improved productivity and efficiency. Since outsourcing involves hiring an outside party, your company’s employees would be able to focus on their own work while the third party gets the job done promptly. The third party that is hired is typically specialized in the field that they are hired within. For example, if your company needs to write blogs but does not have someone internally specialized in blog writing, the work can be outsourced to a company specialized in blog writing and content creation, allowing you to get the best work at a cheaper price.
Outsourcing Disadvantages
While outsourcing provides the opportunity for higher productivity levels, an organization that uses outsourcing has little control over the outside company that is hired to complete a project. For example, say your company strives to have friendly customer service but you hire an outside support center. Your company has minimal control over how that center interacts with customers, which could tarnish your company’s reputation. Many challenges can arise when working with outside organizations, especially if the third party is international. Using an outsourced company means that communication is more likely to be difficult. The outsourced organization may be slow to respond or communicate through platforms that you aren’t familiar with. They may even be working in a different time zone. Furthermore, outside parties don’t know your company as your own employees do. If you want the job done a particular way, you will have to communicate that very clearly and maybe even brief the outsourced company on your organization’s vision, goals, and identity. Furthermore, if the outside source fails to do the job the way that you want it, you could be wasting time and money.
Insourcing Advantages
Insourcing can have several advantages over outsourcing. This can partially be attributed to the fact that your employees know your business better than anyone else. Insourcing can be a smart decision if the task will benefit from an internal employee’s knowledge of the company and its brand. Internal employees understand the brand identity and have an affiliation and loyalty with the company. Your own employees are likely more interested in your organization than outside parties and would thus be more inclined to put in the utmost effort for the impending tasks. Insourcing gives the organization more control over decisions and processes because tasks are kept internally. Insourcing also provides easier means of communication because your company already has proven, existing communication methods. When working internally, you don’t need to share company information and waste resources briefing external sources. Insourcing also serves as a chance to support domestic labor.
Insourcing Disadvantages
Depending on the project or task, insourcing may hold the disadvantage of being costly. The project might involve resources, talent, or a department that doesn’t currently exist in your organization. In this case, insourcing can require hiring new talent or even creating a new department and procedures. In-house employees cannot be experts at everything the way that an outsourced firm can be specialized and experts in certain fields. Furthermore, employees may feel overwhelmed and experience burnout if they are assigned a heavier workload than usual. However, if implemented correctly, insourcing can be the best decision for your company.
Insourcing at Twelve Tables
At Twelve Tables, we use a mix of both insourcing and outsourcing. We are a collective, meaning that everyone on our team is an owner of their own successful studio and a specialist in their assigned field. Almost all of our client work is outsourced to experts in our collective that we work closely with, making it seem more like insourced work. Our method translates to a hand-selected team with the flexibility of a small studio and the scalability of a large firm for our clients. Simply put, Twelve Tables helps our clients create a strategy and then we connect our clients to specialists in the collective to execute that strategy. The use of our trusted experts ensures the creation of great, strategic work for each of our clients. We found the best of the best, so you don’t have to. If you’re interested in working with Twelve Tables, please contact us at hello@twelvetables.com.
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