Insourcing vs Outsourcing: Everything you Need to Know
Insourcing vs Outsourcing is a common comparison in the days when entrepreneurs abroad and employees together with their management and supervisors offshore have taken a liking to business process outsourcing.
Insourcing and outsourcing can have certain pros and cons depending on your company, the nature of your business, the services you offer, and the nature of the work you expect from your service providers.
Insourcing Definition
Insourcing is performing tasks that can be otherwise outsourced to a service provider in-house.
This means that you hire people either through your own HR or through an agency, and supervise them in the physical premises.
If not, insourced employees can work in another office, but they are within the same state or territory instead of being offshore.
Insourcing Examples
In-house Payroll
If you want total control over your payroll, disbursements, schedules, and payments then, insourcing payroll is a great idea.
They can work for you directly, or you get an agency to facilitate their onboarding but they work in your premises or in a location in your city.
In-house marketing team
You can hire an in-house marketing team.
Insourcing marketing and advertising efforts can lead to a more organic and dynamic way of making marketing decisions instead of outsourcing them away from home.
In-house marketers are familiar with your culture and target market and changes can be made spontaneously if your sales and marketing staff work under the same roof.
In-house customer service
Maybe you run a restaurant and you do the waiting and the cooking yourself.
You can hire an in-house customer service clerk or attendant to help you shoulder some of these tasks.
Hiring in-house is just like a business partnership in the sense that you may be seeing your insourced employees every workday.
In-house software development
Software development is something that could require in-house supervision and oversight.
The complexity of finding the right framework and feasibility of mobile and software apps requires insourced employees especially if the brain trust of the apps are also the clients themselves.
Outsourcing Definition
Outsourcing is obtaining the services then of an offshore or external organization instead of performing them in-house.
Outsourcing can be done onshore or in the same country.
The most common form of outsourcing thought of is offshore outsourcing, where a company’s management farms out a huge bulk of backend tasks and routines remotely to another country.
Outsourcing Examples
Customer service outsourcing
Outsourced customer service is the most common process to outsource in the call center industry.
Customer service can be voice or nonvoice.
So hiring an employee offshore is a logical step for businesses wanting to farm out these processes so their organization can attend to more pressing, front-facing concerns.
Virtual Assistant/Data Entry outsourcing
If specific tasks require a generalist instead of someone taking and making phone calls exclusively, then hiring an offshore virtual assistant is great for making full use of remote staffing while being able to assign a wide array of tasks to your outsourced employee.
Outsourcing payroll
If you can establish a way to operate your payroll and taxes through a remote staffing company, then payroll outsourcing is one of the most convenient processes to outsource since it is a repetitive task and generally does not require personal supervision.
It requires a fixed schedule, but it can be standardized offshore.
Outsourcing bookkeeping
Hiring a local bookkeeper can be extensive.
If the nature of your tasks would not require much analysis or a heavy-handed approach to finance management, outsourcing bookkeeping is an option that makes sense for many small business owners.
Insourcing Advantage over Outsourcing
Insourcing has an illusory advantage over outsourcing because of the creative control you get from it.
In fact, if you work with the same person and she or he is literally inches from you, that is the most hands-on you can get when conducting your operations.
Outsourcing Advantage over Insourcing
Outsourcing is often marketed as cost-efficient.
If you outsource to a location with a lower cost of living such as the Philippines, you can get more bang for your buck because you pay lower and you may obtain high-quality output from your employees.
Also Read: Benefits of Outsourcing to the Philippines
Insourcing vs Outsourcing Across Different Aspects
Workforce Management
You can think of in-house staffing as personal management, hands-on supervision.
While outsourcing as distant, online calls and online management.
Managing staff in-house or offshore though must give you the option to hone in on your supervision or to ease back and let go.
Hiring a good outsourcing company can give you the advantages of in-house and outsourced management.
Project Management
Local staff can typically be managed by punching in and out and reporting directly to HR.
And since they’re reporting to your office, with presumably your supervisors, you won’t have to worry about them coming in or out.
You can employ time management software for both insourced and outsourced employees too.
Labor Costs
If you hire in the States at least you may need to spend $21 per hour to find a really decent employee.
Paying someone the right amount because of the higher cost of living in America is vital.
In Australia, you may need to spend $17 AU per hour to get a really decent worker.
Hiring a really good outsourcing company though can give you a chance to shell out as low as $8.00 US Dollars per hour and already be given the software, equipment, office space, and employee
Communication
Communication happens speedily in in-house staffing.
In outsourcing, you may need to make online phone calls to manage your team.
You can take advantage of online collaboration platforms though, like Trello if you want to communicate efficiently with your employees and give them instructions.
Time Zone if Outsourcing Overseas
If you outsource to the Philippines and you’re in the US or UK, there may be a time difference.
You can hire night shift workers in your outsourcing company so they can comply with your hours in your time zone.
In Australia, there is a 3-hour time gap between AU and the Philippines.
You may worry about hiring sleepy workers if they’re on their evening shift.
However, arrangements can be made so that you can get the best and the fittest and well workers while they’re on the clock for you.
Insourcing Disadvantages
Hiring locally, from a Western standpoint is expensive.
In fact, establishing your own workforce and human capital doesn’t come cheap.
The cost of hiring employees also goes with leases, rentals, taxes, and electricity.
For all its hands-on capacities, in-house recruitment can be costly and unless you have a really efficient business model, it can be hard to break even.
Outsourcing Disadvantages
You won’t be able to control your operations with outsourcing if you’re hiring people remotely.
It can work like in-house staffing if you find an outsourcing company who gives you full operational control.
Which Is a Better Option?
Insourcing is good when you want physical labor to be done for a relatively short period of time.
In fact, hiring a local crew for a task that is an expected part of your pipeline is logical.
Outsourcing is great for business owners who want to offshore some of their remote tasks, save up on labor costs and focus on improving their sales funnel.