Insource or Outsource

Insource or Outsource Sign

What is outsourcing?

Having spent much of my career in the business process outsourcing world, I have a “soft spot” for the value of using an “outsourcer”. Outsourcing means a company moves a portion of their business activity to another company. There are many reasons why organizations choose to outsource. The most common driver is to reduce costs, but there are other reasons such as domain or process expertise, or to remove or shift a management headache.

What is insourcing?

Insourcing obviously would be seen as the opposite of outsourcing and could be described as the decision or effort made by an organization to commit internal resources to reach similar objectives that could alternatively be achieved through outsourcing. The objectives are achieved when applying a business process management (BPM) methodology to their organization.

Coming together is a beginning; keeping together is progress; working together is success.

– Henry Ford

When a company goes down the path to continually evaluate and improve their processes, really working together, their rewards are beyond what can be achieved through outsourcing.

Should I Insource Or Outsource?

Perhaps the biggest flaw in the concept of outsourcing is the fact that, as an organization, you are now relying completely on another company to improve your process and to care for its success as much – or more – than you did. But the reality is that it usually doesn’t work that way. The outsourcer’s main interest is to make a profit, meaning they aim to deliver in a cheaper and more streamlined way than you were. Often this results in a loss of process and quality controls on your part to get the results that you want and need. It is also interesting that what the outsourcer is really doing is applying some initial level of BPM to your process. But once they have achieved a comfortable level of improvement, the improvement cycle stops and you become stuck at that level for the duration of the contract.

Insourcing when combined with a business process management suite (BPMS) allows the cycle to continue. BPMS should be an application infrastructure or platform to support BPM projects and initiatives – not an application that you are forced to mold your processes into. It should support the entire process improvement life cycle — from process discovery, definition and design, to implementation, monitoring and analysis, and through ongoing optimization. A BPMS with a model-driven approach enables business and IT professionals to work together more collaboratively throughout the life cycle than is possible with other approaches to solution delivery.

Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while. An organization’s ability to learn and translate that learning into action rapidly is the ultimate competitive advantage.

– Jack Welch

Jack Welch consulting

A BPMS platform is needed to assist companies in achieving that competitive advantage.

There still are compelling reasons to outsource in certain situations, but for real control and growth, to propel your company to new levels of productivity, creativity and profits, insourcing and embracing BPM is often the better path.