Every time a company has a new project in mind, it must make a decision whether to insource or to outsource. It is one of those major decisions that would impact a company’s budget, work quality, and scheduling, among other things. If we compare IT outsourcing companies vs. insourcing, how can you be certain to pick the best option for your company? We walk you through it in this guide, dealing with the pros and disadvantages of outsourcing and insourcing.
What is insourcing?
Insourcing also means in-housing: using either existing employees who are part of the company, perhaps on a different project, or recruiting new personnel to strengthen the internal team. If using your existing staff, this might mean a reassignment across different project groups or an effort to develop their knowledge in the relevant area further. Insourcing, therefore, aims at the utilization of the available workforce and skills already in the organization or the addition of new resources to enhance internal capabilities.
Insourcing Benefits
- Control of your core business. By opting for insourcing, you gain total control over your project, which allows you to make quick decisions per plans.
- Less risk of spreading confidential material. It contains less risk of information leaks that might be harmful to the project, as the project is being dealt with by the core business and a small circle of employees. Greater control of the information flow will result in minimizing the chance of accidental or unauthorized distribution of sensitive information relevant to the project’s success.
- Operations Knowledge – Increasing. You add width to the base of knowledge of your company when you incorporate more and more new workers that have updated knowledge; in this way, enriching the whole company for having different outlooks and experiences can further increase innovation and improvement in different aspects.
- Increased collaboration skills. Insourcing gives you increased collaboration within the company, as both communication and adaptation to the company’s values and working methods are better.
Disadvantages of insourcing
- Takes a long time. The recruitment process and the initial learning phase for new employees take time and can create delays in the project.
- Higher cost. Internal recruiting is costly and may be burdensome for the company’s budget. In addition to paying full-time salaries, other costs involve equipment and software that the employees will use. This is a huge financial investment for the company, and that is why a company should not take any decision without giving proper thought to the cost involved.
- Gaps in skills may appear. If you use your existing workforce, there can be a skills gap, which means a steep learning curve and probably overwhelming stress for employees. In such cases, new technology or changes in project scope demand rapid adaptation. Developers need to acquire new skills, which makes the work environment challenging and puts extra pressure on employees.
What is outsourcing?
Outsourcing, in simple words, means that your company outsources one or more activities to third-party vendors or IT outsourcing firms. In other words, it is the process of delegating specific parts of a business or project to other companies or individuals outside your organization. Anything from web development and customer support to manufacturing, accounting, marketing, and many other areas can be outsourced.
IT consultant outsourcing vs. insourcing in 2024
Benefits of outsourcing
- Opportunity to focus on your core business. The skills required for a particular project may not be at the core of your business or something you will need for later projects. Hiring externally therefore saves both time and money so you can focus on your core business.
- Access specialized expertise and knowledge. Outsourcing partners often have expert knowledge and train their staff to a level that sometimes is not developed within your enterprise. By outsourcing, access to highly valued knowledge from your outsourcing company can be used to enhance your company’s competence.
- Costs are reduced. Because the IT outsourcing service remains even after the project is complete, you are able to staff for a project without the financial commitments associated with internal hiring. At the end of the project, it is easy to go back to a fully internal team structure with no extra cost.
- Save time. Outsourcing doesn’t just mean lower costs; it also saves you from the time you would have to spend to make job advertisements, review potential applicants, and conduct interviews. In this case, the onus of all recruiting lies on the outsourcing company. Your company will be ready in a couple of days to get the project up and running.
- Free to scale up and down. With outsourcing in IT, clients are also empowered to scale up or down on skill work while the project implementation is ongoing. Afterward, it also won’t be burdensome to turn back to the structure internally without much hassle.
The disadvantages of Outsourcing
- Reduced control and overview. With the outsourcing of some expertise, there is a great risk that your company loses control over certain parts of the execution. Therefore, many agencies opt to work in agile working methods so you get regular demonstrations of how the project progresses.
- Communication problems. No matter how great the communication between both parties via phone calls and meetings is, there are going to be problems in communication because you have not worked together before, and both of you have different expectations about the project.
- Risk of information leakage. There is always a risk involved with external companies that sensitive information might be shared with unauthorized partners, which could damage the project. Therefore, make sure you have a watertight confidentiality agreement between the parties.
Conclusion
Through outsourcing, a company saves all the hectic work of seeking out and hunting new talent. This reduces the cost of advertisement, interviews, and other administration processes. Not carrying out recruitment processes saves resources that could be channeled to your core business. Besides this, it also means a quicker start of projects or tasks because you can immediately benefit from the existing skills and competence your outsourcing partner will provide. Future collaborations for your company Overall, the question of IT outsourcing versus insourcing is quite a complicated process, and you need to consider your company’s situation in detail. Need help with outsourcing or have additional questions? With the help of N-iX, you will be able to get answers from qualified agencies the same day. You can submit a free quote request today and get started right away!
Erika Balla
