Insourcing vs. Outsourcing a Service

What is the difference between insourcing and outsourcing, and how does it affect your company? When planning a project, your business has to decide what workforce stream to leverage for that specific task. Do you use internal resources to get the job done? Or find an external provider? Froehling Anderson looks at the advantages and disadvantages to both insourcing and outsourcing, and how to weigh what’s best for your business, below.

 

Insourcing

Using resources that your company owns in-house gives you more control. With the entire process staying on-site, you can fine-tune every aspect. Outsourcing, On the other hand, only lets you only see the end results. With large outsourcing resources, their services are often generic to satisfy a large client base. Because of this, work done by an outsourced asset can lack your company’s signature style or voice. Insourcing also provides an excellent opportunity to promote from within. Internal promotions increase company morale and will create a feeling of ownership, so the project will be more personal.

A potential downside to insourcing is the cost, both financially and in resources. If your company already owns the asset, then it is tied up in the project and not available. If your company decides to acquire that resource, then the lifetime cost of it falls on the company’s budget. This could be salary, benefits, maintenance, and all other forms of expensive charges.

 

Outsourcing

Conversely, outsourcing can be a cost-effective solution for acquiring a specialized resource only when it is needed. In the example of an employee, a highly-skilled contractor can help finish a project, but then your company doesn’t need to carry their highly-skilled salary on the budget all year long. This project-to-project model also allows your company to hire a fully developed resource, instead of having to train one in-house.

Outsourcing can be particularly effective for back-of-office accounting and cost centers. Companies tend to focus on sales and development areas that drive revenue. This can cause accountants and other cost-related jobs to feel left out of the company culture. With outsourcing, the back-of-office jobs are the revenue generators, so those positions feel important. This leads to happier employees working on your project and more passion brought to the table. Plus, then no in-house employees feel as if they are getting left behind.

 

What is the best option for my business?

That all depends on the project and your resources. For instance, in the example above, thinking about the type of business would lead you to outsourcing accounting. A creative project or leadership role would be an excellent opportunity to promote from within and insource.

Froehling Anderson offers a wide range of outsourced CPA services for your business. From tax, business advising, audit and much more, we make sure your business is running optimally and in compliance. We can help with outsourcing work anywhere from basic bookkeeping to CFO services to guide your company’s financial future. For any questions you have, or to start working with us, contact us today at 952-979-3100.