Outsourcing vs. Insourcing: The Pros and Cons

The question of whether to outsource a particular task or to hire someone in-house to fill the need is one that business owners must face on a regular basis. Sometimes, the choice comes down to cutting costs. Other times, it is a matter of creating new business partnerships. In other cases, however, a company may have a desire to build employee skills and cultivate a certain company culture. Depending on the end goal of the decision, a business owner will have to weigh the pros and cons of both outsourcing and insourcing in order to make the right move for their company.


The term insourcing refers to hiring practices implemented by a business that focus on performing certain tasks and job functions internally, particularly those that would have traditionally been given to freelance contractors. Insourcing is a fairly recent business practice, and has gained momentum in the past several years as lack of jobs in various countries has led to a call for hiring in-house (or at least in-country), rather than outsourcing, particularly in manufacturing industries. The benefits of insourcing include increased domestic employment rates, improved employee skills, and reduced costs of transportation, labor, and taxes.

A major downside to insourcing, however, is the time and cost involved in training an in-house employee to fill a new role. Additionally, depending on the country in which a business operates, it may be less cost-effective to pay the salary and benefits of an in-house employee versus outsourcing the job to another location.

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Outsourcing involves the hiring of a third party either an individual or another company in order to carry out a specific internal business process. The economic climate of today has made outsourcing a major component in business strategy for companies both large and small. Information technology needs in particular, such as digital signage solutions or the use of an audio visual technician, are outsourced by companies looking for expert service without having to hire a full-time employee.

Outsourcing provides several benefits to businesses, including cost savings through lower labor rates and fewer tax requirements. By outsourcing specific projects or job roles, businesses can also take advantage of third-party expertise that may be too costly and time consuming to cultivate internally.

There are many different kinds of tasks that the average company would need to either insource or outsource, from IT to HR consulting. A business owner must assess their needs, budget, and other unique factors to determine the best route for their situation. But hey it’s all in a day’s work!

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