If you have undergone an outsourcing process in the last years and painfully discovered that your expectations have been exaggerated, you may think that insourcing the services (again) may make sense.
In the past the outsourcing debate was driven by the idea, that a company should focus on it’s core business and may outsource all other processes – to companies that are more efficient in their field and leaders in their segment.
Eg. Red Bull sees Marketing as it’s core business and has outsourced a lot of non-core processes. So the first question that would need to be asked is: What is your core business? Production? Sales? Marketing? (your choice). And secondly, thinking about industry 4.0 and a more and more connected world: Does this make it even more convenient to distribute data and processes which are not core-business?
So… is outsourcing the right decision nowadays? And what are the reasons to outsource or insource?
Outsourcing:
- Nowadays: Starting an outsourcing-deal is a time-consuming task: all activities need to be documented and identified, as you need to be very specific what to outsource. You need to establish a tender-process and define the scope and service-levels in detail (eg. reaction times, solution times, First Level Support, etc). Once the right vendor has been chosen, all processes need to transferred and the interfaces to your partner need to be established. Depending on if you agreed upon a lump sum payment or single payments for services conducted, it will be more or less complicated to renegotiate your contract.
- In the future: the outsourcing process will be easy, standardised and clear (internet based)
Insourcing:
- Insourced processes enable you to react faster to changes
- However you need to manage a higher number of employees
- Insourcing should only be done for core-processes (never for non-core activities: eg. bookkeeping should never be insourced).
Outsourcing can be fast and cost-efficient with the right partner and slow and painful with the wrong partner. Nowadays, choosing the right partner for the cooperation is the most important decision in an outsourcing deal. In the future the most important parameter will the the connectivity of the partner.
Leaving security risks aside, I’m convinced that the businesses will get more and more interlinked. The interlinked business world will drive more businesses into their core business – as all other non core activities will be offered by more efficient companies with standardised interfaces to your company.
Only monopolists will have the possibility to avoid a core business focus, as their market power will enable them to integrate processes. All other businesses – that are operating in competitive markets – will have to learn the merits and power of outsourcing.
Share This:
The post Outsourcing or Insourcing? appeared first on STRATECTA.