IT Outsourcing vs. Insourcing: Pros and Cons
Benefits of Outsourcing
By outsourcing, the cost of purchasing new hardware and software to complete the task or paying for in-house staff to take courses to learn the expertise of the skill required is eliminated. Complex tech platforms are quite expensive. When you need to pay for the equipment, licensing, security, maintenance, shipping fees, and other related bills, the cost of outsourcing might be cheaper.
Outsourcing also removes the cost of employee turnover, sick leaves, and other expenses that might accompany using in-house staff.
Before an organisation or individual is hired for outsourcing services, that organisation must be adept at the particular task. There are high chances that the individual has completed such tasks previously, and so there are records of results that can be leveraged.
With an expert, you can predict the result of a current project from reviews and past projects.
With external hires, your options are more flexible. You can always make necessary changes to meet changing requirements. You might require a particular service as a one-off process and not need it again for the remaining period. In this case, you can always outsource the project and stop the process when it is not needed. When insourcing, you might have to buy several pieces of equipment and tools that you may never need again.
By outsourcing the non-core aspects of your business to professionals, you can focus on the core aspects and maximise the available time for higher productivity.
Cons of Outsourcing
The moment you outsource a particular aspect of your job to another organisation, you lose control over the aspect. The service provider will be in charge of compliance and oversight of IT project management. This can be quite risky, especially if it is a new provider you have hired.
When outsourcing, you will have to entrust some of your organisation’s sensitive data to the company. With the increasing rate of data breaches in the world today, this can be risky.
- Unforeseen circumstances:
When it is your company, you know what to expect at any given point. However, this is not the case with outsourcing. External problems might occur in vendor management; the other company might run out of resources and even go out of business. These factors will consequentially affect your business.
Benefits of Insourcing
Project management is easier when the team is in-house. They have access to existing data and information about the company, so they can always use that information to improve the efficiency of the work. Both the software and hardware can be effectively managed.
The insourcing team will have better communication with other departments in the organisation. This will help them understand the processes better and produce faster results.
If the in-house team needs to learn a skill to carry out that project, that knowledge will be beneficial in the long run for the organisation. If similar needs arise in the future, you can always reach out to your in-house team and get the work done.
Cons of Insourcing
Insourcing might cost more than outsourcing in some cases. The cost of sourcing, hiring, training, onboarding, purchasing new hardware and software, taxation, and other processes might be high.
You can invest a lot of money into the acquisition of skills for your in-house team, and then they decide to leave the organisation after a while. In this case, you can no longer make use of these skills as insourcing when you need them, or you might have to train another set of employees, who are also indispensable.