In-House vs. Outsourced Services

IN-HOUSE OUTSOURCED VERS US Every business has to determine whether they should perform a service in-house, or outsource that particular service to an outside vendor. Many companies are realizing that outsourcing allows them to cut costs, save valuable time, increase messaging capacity and restore focus to core business operations. To outsource or not to out source, that is the question... IN- Locate a qualified employee Train the employee SOURCING Provide the employee a physical workspace Pay employee wages and benefits IF A SERVICE IS PROVIDED Provide required technology items such as computers, phones and internet access IN-HOUSE A COMPANY MUST: OUT- Companies are beginning to outsource everything from monitoring firewall devices to watching access control lists and handling email security SOURCING Reasons to outsource work: OUTSOURCING IS SPECIALIZED SKILLS WHEN YOU HIRE The task is highly specialized and requires expert skills or systems, such as graphic design, we bsite development, payroll, PPC campaigns, human resource compliance,etc. A CONSULTANT, SERVICE PROVIDER, OR AGENCY TO MANAGE A SPECIALIZED EQUIPMENT The task requires a large facility, specialized equipment, or operational efficiencies PORTION OF YOUR BUSINESS Fulfillment operations are frequently outsourced because of the need to stock large amounts of inventory and manage it efficiently SEASONAL NEEDS The task is seasonal or may need to scale up or down quickly Customer service is frequently outsourced because those providers are better equipped to handle a high volume of calls on demand LIMITED NEEDS The cost of hiring in-house is prohibitive for the amount of work This is usually because the tasks needed to fulfill are not fulltime and you simply can not afford to hire a highly skilled person for a part time position TEMPORARY NEEDS The operation or task is temporary or short term You may need the task done for the short term, such as seasonal fulfillment, tax preparation, a website redesign, or upgrading your infrastructure OUTSOURCING BENEFITS You are able to bring in an expert for a defined period of time to perform a task without committing to them long term You may save thousands of dollars by not committing to an annual salary and benefits For long term needs, such as fulfillment, marketing activities, or customer service, you gain operational efficiencies and skills that are difficult to replicate in-house • DISA DVANTAGES • You'll need to find an affordable and high quality service provider, which can be time consuming The cost of working with the right agency may be too high Good service providers tend to be very busy INSOURCING BENEFITS The biggest benefit of insourcing is building your own team for operational functions You control the provider's time, activity, and quality Most companies try to maintain the core operations that they believe will differentiate their business in house A primary advantage of insourcing is increased control Companies have more control over the time, resources and results of the work Companies can develop and execute their own plans in a specialized area The company can integrate a new or growing specialization into the organizational structure and develop reporting procedures, monitor progress and make adjustments as necessary DISAD VANT AGES If your team doesn't have the skill levels or expertise required it may end up costing more to get them up to speed A primary disadvantage of insourcing is the lowest-cost factor Developing nations with large population ce nters and growing business and industries are prime grounds for outscoring Such processes include distribution and call center support Labor in these countries is often less expensive and can drastically cut costs for larger corporations that would have to hire hundreds of workers to operate warehouses or man phone lines Another common disadvantage is that it takes a company's focus away from core business activities IT that outsource infrastructure management and application services can expect to save 12% to 17% annually on average ] Another 37% say outsourcing could help them develop new products or services /3 This equates to U.S. companies sitting on about $ 10 billion in potential savings More than 40% of businesses say that they would outsource to improve customer relationships said outsourcing would be important in helping companies expand into geographies they could not otherwise enter Executives are increasingly willing 53% indicated they outsource to outsource functions considered core to the business activities that they consider to be core 60% IT remains the most outsourced activity, with about 60% of companies sending those duties outside their company 70% of companies outsource one or more of what could be considered strategic functions 50%+ + of companies outsource production or delivery of core products and services 33% of companies outsource sales and marketing 32% of companies outsource R&D activities Outsourced security services have become more popular in the last few years OUTSOURCING MISCONCEPTIONS OUTSOURCING IS USUALLY CHEAPER, BUT NOT ALWAYS Some companies transition their tasks to an outsourced operation and do not experience a cost savings. Many companies think that outsourcing is like buying commodities with no transaction costs or other restraints Outsourcing actually carries significant transaction costs, including finding a vendor and contract negotiations Sometimes companies think that contracts don't matter and try to rush into an outsourcing deal without a contract A contract can help relieve any confusion or tension between partners Savings are the main draw to outsourcing The primary reason for outsourcing is global expansion and to add value in terms of capability and capacity Outsourcing does not necessarily mean offshoring A lot of outscoring work doesn't actually leave the country of the business Most outsourcing relationships that are based purely on cost have a tendency to fail Many believe that a job outsourced is a job lost Outscoring actually means efficiency It is a means of getting more final output with lower cost inputs, which means lower costs for local business and consumers Lower prices lead directly to higher standards of living and more jobs in a growing economy It has little net impact and represents less than 1 percent of gross job turnover TOP TASKS TO OUTSOURCE BOOKKEEPING PAYROLL Bookkeeping is the number one task in small businesses that owners neglect and struggle with managing By hiring an outsourcing company to do your payroll, there will be no issues when income tax By outsourcing the work, the bookkeeping can be done a lot faster and more accurately than the owner can, while still remaining affordable season comes around SOCIAL MEDIA ADMINISTRATIVE MARKETING SUPPORT When the se tasks are performed in house, it is often hard to retain the consistency of doing them PASSPORT By utilizing a virtual assistant, maintenance of scheduling, travel arrangements, mailings, email newsletters and more are done well and on time RESEARCH MARKETING There are talented EFFORTS ill. professionals around the world who are willing to complete research tasks faster and for less money Since marketing ties directly to a company's sales results, outsourcing additional and specialized marketing tasks to consultants or public relations specialists should only boost sales and benefit the company than hiring someone in house In order to decide what tasks to keep in house and which to outsource, a company needs to examine its size and the abilities of their current work force before making any significant changes to their company structure. Most companies however will and do benefit from outsourcing one or more company tasks. SOURC ES: www.practicale commerce.com/articles/3705-Outsourcing-v-Hiring-In-house-Pros-and-Cons www.kmaone.com/inhouseoutsource.htm www.networkworld.com/news/2007/102607-arguments-outsourcing-inhouse.html Ignitesot 192.206. 112.39/outsourcing-vs-in-house/ 3.wsj.com/news/articles/SB118166189129632603 outsourcemagazine.co.uk/outsourcing-myths-facts-and-statistics/ www.heritage.org/research/reports/2004/04/ten-myths-aboutjobs-and-outsourcing www.ehow.com/info_10015686_advantages-disadvantages-insourcing.html succeedasyourownboss.com/06/2013/top-5-tasks-to-outsource-in-your-small-business/ www.huffingtonpost.com/melinda-emerson/small-business-outsourcing_b_3874954.html www.thedailymuse.com/toolsskills/7-tasks-you-should-outsource-immediately/ online. spot Outsourced Accounting DO