♥♥Outsource Or Insource?♥♥

OUTSOURCING

In the recent times there have been lots of speculations and negative criticisms against Outsourcing to offshore destinations. But it has to be noted that outsourcing as a phenomena is not new but has been going on since ages. If one looks at the outsourcing history one can realize that since ancient time’s companies in developed countries have outsourced services to nearby less developed counties.
Before the IT revolution, many companies in the US outsourced manufacturing jobs to countries like Canada, Mexico and South America in order to cut costs. Many even set up separate workstations and factories in these regions. The only difference between then and now can be seen in the frantic pace at which things are happening. Also as manufacturing jobs involved solid goods they needed to be transported that gave rise to a different kind of employment opportunity. IT outsourcing does not involved any transportation from the manufacturing destination to the client\'s place. Apart from these differences outsourcing history seems to be quite an old thing.

WHAT IS OUTSOURCING

It involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, customer services, market research, manufacturing and engineering.

IMPORTANCE OF OUTSOURCING

Business services outsourcing includes a wide variety of businesses that offer services to other businesses on an outsourced basis that can comprise of accounting, receivables collection, benefits administration, HR administration, recruiting, training, security and computer-related services.
This industry is one of the three major industries in the United States that has seen a major growth in the last decade due to recent technological developments.
As organizations have become more comfortable with the benefits of outsourcing transactional processes, they have progressively started to outsource higher value-added services and more comprehensive processes for example, they move from outsourcing just one, discrete function to outsourcing an entire end-to-end process (from accounts payable to complete finance and accounting operations, from payroll to entire HR operations).

OUTSOURCING - ADVANTAGE

One of the most effective marketing tools to maximize profit is outsourcing which is a contract or dealing from an outside supplier or source. With its various advantages and benefits, a lot of companies have already adopted this kind of strategy which maximizes profits and minimizes losses.
Outsourcing allows companies to avail the same level of quality service at a much lower price. For example, call center services and medical billing outsourced to countries such as Philippines and India will allow companies to save almost 50 to 60 percent of the original total cost. Another financial benefit of outsourcing is that entrepreneurs can save capital expenditure and training cost.
With this cost-effective strategy, companies can save time, manpower, infrastructure, and other expenditures, and since there is no need to build infrastructure, repair and maintenance costs can be avoided. With this financial benefit, companies can focus more on its core business by investing on equipment, technologies, software, and other things which can further expand the companies’ operation. In addition to this, the talents and skills provided by the employees can be focused on its specified job, also, since they have more time to concentrate on their duties, employees can further improve their skills which can help their companies to achieve its goals.
Another advantage of outsourcing is that it allows companies to avail high-quality services. In this highly-globalize world where there is tight competition among businesses, it is easy to find a good quality skilled and specialized services which can help companies further expand. Outsourcing will also allow companies to find a business partner where both of these can have a mutual benefit such as increased productivity level, improved skills and talents, enhanced efficiency level, increased level of quality, improved business performance, and increased value of the products and services.

Outsourcing- disadvantages
a.) Before deciding on outsourcing your company\'s business process, keep in mind the disadvantages of outsourcing:
b.) Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.
c.) Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.
d.) May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.
Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.

POSITIVE EFFECTS OF OUTSOURCING
• Aids globalization
• Improves the standard of living in developing countries
• Creation of good job opportunities in developing countries
• Generation of innovative low cost products in counties that outsource
• Better customer service at lower rates
• Generation of newer jobs with better pays in the long run

MAIN OUTSOURCING TRENDS FOR 2009

1.Consolidation
The end of 2008 caused aggravation of the competition between outsourcing companies. There are lots of offshore vendors nowadays and new companies emerge every day. And in the situation that has formed at the present moment a lot of outsourcing organizations are unable to survive. That\'s why experts predict some significant consolidations in the nearest future.
2. Globalization of the market
Globalization of the sector is caused by the outsourcing boom. By recent time main outsourcing countries have been considered to be India and China. They still remain, but a number of states have joined the \'outsourcing movement\', e.g. countries of Eastern Europe (Russia, Ukraine). So the outsourcing sector gains the global scale. The large number of outsourcing companies leads to the more definite specialization of outsourcing.

INSOURCING

Advantages to In-sourcing:
• Helps economy
• More jobs become available to others
Disadvantages to In-sourcing
• More expensive
• Less chance for new companies to succeed
Despite some disadvantages, there are still instance which other people take in-source into account. Wherein they find in-source a way to transform business as usual into business as exceptional. All salt-worthy executives know that the name of the game is reinvention, and those who play best win. What many don’t realize is that they can play the game a lot better, and improve their company’s performance by growing a culture of innovators from within, not by continuing to acquire innovation resources from without. If pervasive innovation is what you want, there’s only one way to get it: in-source it, and make it part of everyone’s job.

In-sourcing Innovation provides a straightforward depiction of why leading organizations are making innovation more systematic and structured.

There are also firms and organizations supporting the in-sourcing – FAIR supports efforts to “in-source” but advises a deliberate and systematic approach based on facts and analysis. The Federal Acquisition Innovation and Reform Institute (FAIR) support efforts to “in-source” critical positions and personnel so that the government possesses adequate organic capability to address the challenging and daunting tasks ahead of us. However, we recommend that the administration, Congress, and agencies proceed with caution, through a deliberate and systematic approach to in-sourcing based on facts and analysis. Agencies should also adopt realistic timelines for recruiting and integrating new personnel as well as developing new business processes, if required... Rushing to undo what has been in the making for years, perhaps decades will be counterproductive.

Guidance for in-sourcing should address the critical question of ‘inherently
governmental’ and core competencies. As the Obama administration, Congress, and agency leadership lay out guidance and legislation regarding positions that should be in-sourced, the most important questions that we should be asking are:
• What are ‘inherently governmental’ positions? Are there any currently beingperformed by contractors and if so, how can they in-sourced immediately?
• What core competencies are critical to achieving agency and program missions?
• Which positions are tied to core competencies?
• What is the right balance between government versus contractor positions (in the short term and longer term)?
• Beyond number of positions, does the government have the ability to create
• Efficient business models to deliver capability and expertise being provided by
Contractors?
• Where should government still continue to leverage government expertise and technical capabilities?? How and when should positions be in-sourced? What are critical processes and policies, such as the hiring process and the pay system, that need to be improved to attract the required number of staff?
Perhaps there are doubts turned into confusing thoughts between outsourcing and in-sourcing. In that way, we probably ask this question -- What is best for your organization?

If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers. If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverable, outsourcing is again a good option.

If your work involves production, then it would be more ideal for your organization to opt for in-sourcing, as you can save on transportation costs and exercise a better control over your project.

It is not necessary to choose outsourcing over in-sourcing or vice versa. Your organization can outsource and in-source at the same time. By outsourcing and in-sourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!

the use of in-house personnel or an internal department to meet an organization\'s need for specific services. In-sourcing is seen as a reaction to the growing popularity of outsourcing that has not always met expectations. An in-sourcing strategy is chosen where it appears that a better service can be provided from internal resources than from an external supplier. In some cases, organizations opt for a combination of outsourcing and in-sourcing, in which external service providers work in cooperation with in-house personnel.

As a student,I prefer to choose outsourcing in such a way that I can save my time and I don't need to work hard for it.