Monday, October 12, 2009
In-sourcing or Outsourcing?
There’s a big deal today what are you prefer for? In-source or outsource? In my assignment, our professor was given us a task to take in a position in outsourcing or in-sourcing. But before I choose what the best is for me, I will have some resources to identify what is outsourcing and what is in-sourcing.
What is in-sourcing?
In-sourcing is a business practice in which work that would otherwise have been contracted out is performed in house.
In-sourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. An example is the use of in-house engineers to write technical manuals for equipment they have designed, rather than sending the work to an outside technical writing firm. In this example, the engineers might have to take technical writing courses at a local college, university, or trade school before being able to complete the task successfully. Other challenges of in-sourcing include the possible purchase of additional hardware and/or software that is scalable and energy-efficient enough to deliver an adequate return on investment (ROI).
In-sourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is in-sourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.
The opposite of outsourcing can be defined as in-sourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as in-sourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for in-sourcing because it enables them to maintain a better control of what they outsource. In-sourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. In-sourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for in-sourcing in order to cut down the cost of labor and taxes amongst others. The trend towards in-sourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards in-sourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by in-sourcing their work rather than outsourcing it. According to recent studies, there is more wok in-sourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and in-source work equally.
What is outsourcing?
Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. Outsourcing can range from the large contract in which a company like IBM manages IT services for a company like Xerox to the practice of hiring contractors and temporary office workers on an individual basis.
Outsourcing began in the early eighties when organizations started delegating their non-core functions to an external organization that was specialized in providing a particular service, function or product. In outsourcing, the external organization would take on the management of the outsourced function.
Most organizations choose outsourcing because outsourcing offers a lot of advantages. When organizations outsource to countries like India, they benefit from lower costs and high-quality services. Moreover organizations can concentrate more on core functions once they outsource their non-core functions. Outsourcing can also help organizations make better use of their resources, time and infrastructure.
In outsourcing, the outsourcer and the outsourcing partner have a greater relationship when compared to the relationship between a buyer and a seller. In outsourcing, the outsourcer trusts the outsourcing partner with vital information. Outsourcing is no longer confined to the outsourcing of IT services. Outsourcers in the US and UK now outsource financial services, engineering services, creative services, data entry services and much more.
Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital, focus on core competencies, shorten the delivery cycle time and reduce costs significantly. Organizations feel outsourcing is an effective business strategy to help improve their business.
Why In-sourcing is my choice?
In-sourcing because outsourcing has gone wrong is a mistake. If you are thinking of taking a business function back in-house because of failings either in your supplier or, indeed, because of failings of your own, then just pause for a minute. There is one good reason to in-source, to which we will come, but the myriad of technical issues, operational difficulties and relationship problems that can cause you to despair of ever having uttered the ‘o’ word are not it. In-sourcing for the sake of it merely compounds your troubles. You might be forgiven for thinking that insourcing was the latest outsourcing trend, according to some recent media reports. But what is really happening on the ground is far harder to discern and so far more complex.
One thing is for sure: outsourcing is growing and for the most part people are happy with the deals they construct. One independent statistic – a recent Gallup survey –showed that 57 percent of companies surveyed believe that outsourcing has delivered 100 percent of the expected benefits. This is a good success rate by any measure. So where does the comment on insourcing, with its suggestion that outsourcing is riddled with shortcomings, originate?
Right choices
Having said that, insourcing is an option that many are likely to consider at some point, whether it is for what we believe are the negative reasons of supplier factors (complacency, overselling, rising costs, and the like) or client factors (poor rationale, poor sourcing, poor internal management, and so on). However, the reason why insourcing can compound troubles in these cases is twofold.
First, insourcing can be as problematic as outsourcing was in the first place. In particular, in-house skills and systems that have been reduced or removed have to be returned, a process that carries risk and cost. Second, and more profoundly, insourcing for these reasons will only store up problems for the future.
The issue here is that provided outsourcing as an option has been reviewed alongside other sourcing options, then in the vast majority of cases outsourcing is usually right in terms of the decision but, if it struggles to realise benefits, goes wrong in the execution. Execution issues can, with time and application, be put right. But if the fundamental reasons for outsourcing still hold – reasons such as wanting to drive through efficiency, effectiveness and transformational changes – then to go back on the decision represents an opportunity cost for the business. When added to the cost of in-sourcing itself, the total might be very detrimental indeed.
One good reason
There is, we think, one good reason to consider insourcing. That is when external factors are such that the situation in which the organisation finds itself has so changed that it becomes not only attractive but right.
This does happen and there are well-publicised examples to illustrate. For example, when JP Morgan merged with Bank One the economies-of-scale that it had sought by outsourcing with IBM were suddenly realisable internally. Alternatively, when Cable & Wireless decided to in-source, again from a deal with IBM, the reasons were good: finding itself in a trading position where it wanted to exercise the kind of control over costs that could only be gained by in-sourcing.
These, though, are seismic changes. They are extraordinary, just as the insourcing that accompanies them should be as well.
In fact, the real outsourcing story is far more positive. The industry is maturing. We are seeing sourcing decisions and governance improving, as companies become savvier both in terms of what they want and in terms of what they ask from providers. Moreover, providers are rising to the challenge too. They realise that it is in the interests of all concerned to have deals that allow clients and providers alike to flourish. These are, after all, partnerships.
But remember, insourcing because outsourcing has gone wrong is a mistake. Far better is to get outsourcing right in the first place.
Why not Outsourcing?
Outsourcing risks
However, while companies can benefit from the technology resources at their outsourcer, not having any internal network skills can be risky. Companies might find it difficult to assess whether they are getting the best value for money and that services are fit for purpose, for instance.
Of course, lacking the skills to deploy new technology does not necessarily mean companies should outsource all ownership and management. The majority of networking kit is sold through the channel, which means companies can call on the implementation skills of third parties if they want to deploy new technology. They will however need to train or acquire staff that can manage the new network.
Is it cheaper?
Outsourcing has long been a popular choice for enterprises looking to save money. Outsourcers are able to offer the benefit of scale because they can centralize the key IT and network functions and service multiple accounts at the same time. This allows them to offer the same service as the internal team but at a lower cost of delivery.
The experience outsourcers have with network management also means they should also have more effective processes based on established best practices to deal with the most common networking issues.
Network outsourcers can make the total cost of ownership (TCO) equation look even more attractive as they are able to source equipment from suppliers at a substantially cheaper rate. Adrian Lau, IT services manager at ST Mary's NHS Trust, says: "We buy our network equipment through Damovo. We use open-book costing where Damovo puts five per cent on the list price. This is cheaper than buying through a traditional distributor."
Open-book costing is becoming more common throughout the network outsourcing industry. Richard Mahony, principal analyst at Ovum, says: "Contract pricing is becoming more transparent. However, companies that do sign up to open-book pricing, need to be aware of exactly what it covers, as outsourcers will always try and hide some margin somewhere."
Barriers
Smaller businesses are likely to benefit most from network outsourcing but are often the most reluctant to take the plunge. At the most basic level they typically find it difficult to calculate the cost of managing their IT, and often lump it together with general administration costs. This makes it hard for them to understand the savings they could make from outsourcing.
But perhaps the principal barrier for enterprises thinking about network outsourcing is nervousness over security. Enterprises now need to be compliant with multiple regulations and laws, nearly all of which mandate a high level of data security. Any company choosing an outsourcer will need to be doubly sure that it will actually improve on the existing security processes.
Outsourcing for many companies has traditionally meant job losses, which made it an extremely hard sell to employees. However, far from making IT staff redundant, outsourcing the network and support infrastructure should free up IT staff to work on the company's strategic business applications.
References:
http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
There’s a big deal today what are you prefer for? In-source or outsource? In my assignment, our professor was given us a task to take in a position in outsourcing or in-sourcing. But before I choose what the best is for me, I will have some resources to identify what is outsourcing and what is in-sourcing.
What is in-sourcing?
In-sourcing is a business practice in which work that would otherwise have been contracted out is performed in house.
In-sourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. An example is the use of in-house engineers to write technical manuals for equipment they have designed, rather than sending the work to an outside technical writing firm. In this example, the engineers might have to take technical writing courses at a local college, university, or trade school before being able to complete the task successfully. Other challenges of in-sourcing include the possible purchase of additional hardware and/or software that is scalable and energy-efficient enough to deliver an adequate return on investment (ROI).
In-sourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is in-sourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.
The opposite of outsourcing can be defined as in-sourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as in-sourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for in-sourcing because it enables them to maintain a better control of what they outsource. In-sourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. In-sourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for in-sourcing in order to cut down the cost of labor and taxes amongst others. The trend towards in-sourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards in-sourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by in-sourcing their work rather than outsourcing it. According to recent studies, there is more wok in-sourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and in-source work equally.
What is outsourcing?
Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. Outsourcing can range from the large contract in which a company like IBM manages IT services for a company like Xerox to the practice of hiring contractors and temporary office workers on an individual basis.
Outsourcing began in the early eighties when organizations started delegating their non-core functions to an external organization that was specialized in providing a particular service, function or product. In outsourcing, the external organization would take on the management of the outsourced function.
Most organizations choose outsourcing because outsourcing offers a lot of advantages. When organizations outsource to countries like India, they benefit from lower costs and high-quality services. Moreover organizations can concentrate more on core functions once they outsource their non-core functions. Outsourcing can also help organizations make better use of their resources, time and infrastructure.
In outsourcing, the outsourcer and the outsourcing partner have a greater relationship when compared to the relationship between a buyer and a seller. In outsourcing, the outsourcer trusts the outsourcing partner with vital information. Outsourcing is no longer confined to the outsourcing of IT services. Outsourcers in the US and UK now outsource financial services, engineering services, creative services, data entry services and much more.
Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital, focus on core competencies, shorten the delivery cycle time and reduce costs significantly. Organizations feel outsourcing is an effective business strategy to help improve their business.
Why In-sourcing is my choice?
In-sourcing because outsourcing has gone wrong is a mistake. If you are thinking of taking a business function back in-house because of failings either in your supplier or, indeed, because of failings of your own, then just pause for a minute. There is one good reason to in-source, to which we will come, but the myriad of technical issues, operational difficulties and relationship problems that can cause you to despair of ever having uttered the ‘o’ word are not it. In-sourcing for the sake of it merely compounds your troubles. You might be forgiven for thinking that insourcing was the latest outsourcing trend, according to some recent media reports. But what is really happening on the ground is far harder to discern and so far more complex.
One thing is for sure: outsourcing is growing and for the most part people are happy with the deals they construct. One independent statistic – a recent Gallup survey –showed that 57 percent of companies surveyed believe that outsourcing has delivered 100 percent of the expected benefits. This is a good success rate by any measure. So where does the comment on insourcing, with its suggestion that outsourcing is riddled with shortcomings, originate?
Right choices
Having said that, insourcing is an option that many are likely to consider at some point, whether it is for what we believe are the negative reasons of supplier factors (complacency, overselling, rising costs, and the like) or client factors (poor rationale, poor sourcing, poor internal management, and so on). However, the reason why insourcing can compound troubles in these cases is twofold.
First, insourcing can be as problematic as outsourcing was in the first place. In particular, in-house skills and systems that have been reduced or removed have to be returned, a process that carries risk and cost. Second, and more profoundly, insourcing for these reasons will only store up problems for the future.
The issue here is that provided outsourcing as an option has been reviewed alongside other sourcing options, then in the vast majority of cases outsourcing is usually right in terms of the decision but, if it struggles to realise benefits, goes wrong in the execution. Execution issues can, with time and application, be put right. But if the fundamental reasons for outsourcing still hold – reasons such as wanting to drive through efficiency, effectiveness and transformational changes – then to go back on the decision represents an opportunity cost for the business. When added to the cost of in-sourcing itself, the total might be very detrimental indeed.
One good reason
There is, we think, one good reason to consider insourcing. That is when external factors are such that the situation in which the organisation finds itself has so changed that it becomes not only attractive but right.
This does happen and there are well-publicised examples to illustrate. For example, when JP Morgan merged with Bank One the economies-of-scale that it had sought by outsourcing with IBM were suddenly realisable internally. Alternatively, when Cable & Wireless decided to in-source, again from a deal with IBM, the reasons were good: finding itself in a trading position where it wanted to exercise the kind of control over costs that could only be gained by in-sourcing.
These, though, are seismic changes. They are extraordinary, just as the insourcing that accompanies them should be as well.
In fact, the real outsourcing story is far more positive. The industry is maturing. We are seeing sourcing decisions and governance improving, as companies become savvier both in terms of what they want and in terms of what they ask from providers. Moreover, providers are rising to the challenge too. They realise that it is in the interests of all concerned to have deals that allow clients and providers alike to flourish. These are, after all, partnerships.
But remember, insourcing because outsourcing has gone wrong is a mistake. Far better is to get outsourcing right in the first place.
Why not Outsourcing?
Outsourcing risks
However, while companies can benefit from the technology resources at their outsourcer, not having any internal network skills can be risky. Companies might find it difficult to assess whether they are getting the best value for money and that services are fit for purpose, for instance.
Of course, lacking the skills to deploy new technology does not necessarily mean companies should outsource all ownership and management. The majority of networking kit is sold through the channel, which means companies can call on the implementation skills of third parties if they want to deploy new technology. They will however need to train or acquire staff that can manage the new network.
Is it cheaper?
Outsourcing has long been a popular choice for enterprises looking to save money. Outsourcers are able to offer the benefit of scale because they can centralize the key IT and network functions and service multiple accounts at the same time. This allows them to offer the same service as the internal team but at a lower cost of delivery.
The experience outsourcers have with network management also means they should also have more effective processes based on established best practices to deal with the most common networking issues.
Network outsourcers can make the total cost of ownership (TCO) equation look even more attractive as they are able to source equipment from suppliers at a substantially cheaper rate. Adrian Lau, IT services manager at ST Mary's NHS Trust, says: "We buy our network equipment through Damovo. We use open-book costing where Damovo puts five per cent on the list price. This is cheaper than buying through a traditional distributor."
Open-book costing is becoming more common throughout the network outsourcing industry. Richard Mahony, principal analyst at Ovum, says: "Contract pricing is becoming more transparent. However, companies that do sign up to open-book pricing, need to be aware of exactly what it covers, as outsourcers will always try and hide some margin somewhere."
Barriers
Smaller businesses are likely to benefit most from network outsourcing but are often the most reluctant to take the plunge. At the most basic level they typically find it difficult to calculate the cost of managing their IT, and often lump it together with general administration costs. This makes it hard for them to understand the savings they could make from outsourcing.
But perhaps the principal barrier for enterprises thinking about network outsourcing is nervousness over security. Enterprises now need to be compliant with multiple regulations and laws, nearly all of which mandate a high level of data security. Any company choosing an outsourcer will need to be doubly sure that it will actually improve on the existing security processes.
Outsourcing for many companies has traditionally meant job losses, which made it an extremely hard sell to employees. However, far from making IT staff redundant, outsourcing the network and support infrastructure should free up IT staff to work on the company's strategic business applications.
References:
http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
Labels: Assignment#8
Subscribe to:
Post Comments (Atom)
14 comments:
Please what are ten reasons for which an organization may decide to switch from outsourcing to in-sourcing.
I was very pleased to find this site.I wanted to thank you for this great read!!Alternatively create a great blog for in sourcing & Outsourcing services
.
Great post. Its very interesting and enjoyable. Its must be helpful for every new freelancer. Thanks for sharing your nice post.
disable people
famous disabled people
“hpthermalcamera.com/product/ “ As one of the leading manufacturers for long distance thermal imaging camera and infared laser night vision camera. Hope-Wish alwaysing focusing on customer’s requirements, providing professional services and high-tech cameras to protect national security and social stability.
We manufacture mainly three kinds of products which include thermal imaging camera, IR laser camera a
Christy We aim to be the premiere Seattle moving company! With our great customer service and the excellent seattle movers, you can trust us to meet all of your Seattle moving needs!
Hi. thanks for sharing such a nice post.please continue to share more posts.portable speaker system on wheels
Really nice and interesting post. I was looking for this kind of information and enjoyed reading this one. Keep posting. Thanks for sharing. neutrik connectors xlr
Making cooking a little easier. It's hard, it takes time and who's got the time after a long day of work, looking after kids and being on your feet all day ? I bet you don't and neither do I.. making cheap and tasty modern day meal kits the new normal among all the changes going on in our world today. meal kits
alice brownies
the backlit keyboard review
the backlit keyboard review The backlight keyboards are particularly important for better use of your PC during the night. This is due to the way they have backlight keys to realize superior perceptibility.
AKtuAlity
BYDlenÍ
Ketamine Infusion,
Ketamine For Sale,
Post a Comment