The primary goal of any organisation or business venture is the maximisation of its profits. This entails assigning tasks to personnel and investing appropriate resources to the realisation of production tasks. In doing so, business managers can decide between in-housing and outsourcing.
In-housing utilises personnel and resources within the business to complete production processes. Alternatively, outsourcing entails hiring production resources from an outside organisation or business.
The scope of the task majorly determines the decision for in-house or outsourced production. Answering these two questions can help business managers to better decide for or against in housing or outsourcing:
– Is the task long-term or short-term?
The short-term task is better completed in-house while long-term task can make use of out-sourced personnel and resources.
– Does the business have the required in-house expertise and equipment for the task?
When these are lacking, outsourcing personnel and resources is cheaper since in-house training personnel or purchasing new equipment becomes an additional cost. This is especially true if the training and acquisition do not serve beyond the task at hand.
Whereas both in housing and outsourcing have their strengths and weaknesses, there are definite benefits associated with a decision pro in housing. Here are the top 7.
1. Keeping tasks within the business can serve to cut costs, especially when existing human and material resources are readily available for a production task.
2. In housing involves extensive interaction and conversation between management and employees. This can serve to strengthen employee-employer relations and create new energy and ideas for the business. Considering the instance of hotel jobs, rather than outsourcing, insourcing can enhance the interaction between management and their employees that can boost the hospitality nature of the environment.
3. Hiring personnel within the business has a motivational spillover effect on employees and can serve to curb employee turnover.
4. Exposing company information to outsourced staff can elicit intellectual property issues if such information is used for competitive gain by second or third parties. In this light, insourcing ensures confidentiality considering that employees can also be subject to a non-compete clause within their employment contract.
5. Especially when outside investors are involved in a business, in housing gives a sense of security that the company has what it takes to achieve investor interests. Company credibility is likewise enhanced, which can serve to attract new investors.
6. When a business task has short-term timelines, in housing saves time that would otherwise be wasted in evaluating outside resources and negotiating mutual commitments between the outsourcing business and the one providing the expertise or resource.
7. Whether outsourcing targets technological skill and knowhow or existing infrastructure in an outside company, insourcing works to the advantage of the company. This is because insourcing will require training personnel in new knowledge and skill and setting up the infrastructure for a new task. The unique expertise and equipment create an additional asset for the company and set it on the list of possible outsourcing option for other businesses. If we consider Australia for example, there are so many corners of the country that engages in one to one interaction, i.e. management to employee interaction, specifically in the hospitality industry. The famous hotels and luxury accommodations in Hobart, Brisbane, Melbourne CBD, etc. are known for their nurturing hospitality culture and the internal relationship within the hotel warrants this result.
In conclusion, insourcing has extensive benefits related to reduced costs, enhanced employee expertise, and overall company credibility. Even when insourcing comes with additional costs, these readily convert to new assets which work to the advantage of the company.