What is insourcing?
Insourcing is when a company uses its own employees to work on and complete projects. Any project allocated solely to a company’s employees is considered insourcing, keeping the control and organization of a project inside the company.
This may include creating cross-functional teams or hiring new employees to fill the gap; using external vendors or freelancers not tied to the company isn’t considered insourcing.
Because everyone on each project is an internal employee, project collaboration software can help teams communicate, collaborate, and assign tasks to each other while keeping all information protected.
Benefits of insourcing
Bringing all work and assigned workers in-house creates a lot of benefits for projects and companies as a whole. These benefits include:
- Complete creative and decision-making control: Because all resources are internal, it’s easier to monitor the entire project and make shifts or changes as needed at the appropriate time.
- The ability to create career paths for employees: Working on essential projects helps employees learn new skills, practice leadership, and grow in their careers at the company as a part of employee development.
- Stronger collaboration and communication: When a project only uses in-house employees, they can all communicate in the same digital space – or even be in the same office if the company has a physical location.
- Less security risk: Handing over internal resources, sensitive information, and internal processes to a third party always increases the chance of security risks, data breaches, and information leaks. Keeping all the information in-house reduces that risk and allows the IT team to keep company details locked down.
- Control over the timeline and due dates: When a company uses external vendors or contractors, they have a timeline and list of responsibilities they plan against. A company has no control over an external partner’s calendar or timeline. However, internal employees can shuffle priorities and responsibilities as needed, and the time it takes to complete a task or project can be controlled directly.
- Better familiarity and understanding of the company: Because of the internal resources available and intimate knowledge of the company’s goals and subject matter experts, internal employees will better grasp the brand, messaging strategy, and product or service in question. Agencies and contractors often need to do research and discovery calls to better understand what they’re working on, which can lengthen the project’s timeline.
Disadvantages of insourcing
A few limitations to only using in-house employees instead of taking advantage of external vendors include:
- Missing out on the knowledge and expertise of industry leaders: Third-party agencies or consultants are often chosen because of their niche and expertise, which in-house employees may not possess. Training up current employees would take extra time and cost.
- Increased possibility of employee burnout: Bringing more work in-house without lessening the overall workload adds more stress to internal employees, which can cause disengagement or burnout.
- Potential higher labor cost: The overall cost for employees includes base pay, insurance, and equipment. This cost increases if a company needs to hire more employees or there’s a high employee turnover rate. Labor costs can be higher or lower depending on where the business is located.
- Inability to make sudden changes: Internal employees may be less equipped to take on sudden business needs and new projects because of other critical items tasked to them.
Insourcing vs. outsourcing vs. offshoring
Insourcing is assigning and completing work for the business using internal employees.
Outsourcing involves bringing in external agencies, consultants, freelancers, contractors, or other third parties to complete work for the business. Companies often outsource work to free up internal time and resources or potentially reduce overall costs. Additionally, outsourcing is a great way to hire industry experts.
Offshoring is relocating a business to a different country from the business’ home. Companies often offshore work to take advantage of lower labor costs. Offshoring can sometimes be considered a type of outsourcing.
Whitney Rudeseal Peet
Whitney Rudeseal Peet is a former freelance writer for G2 and a story- and customer-centered writer, marketer, and strategist. She fully leans into the gig-based world, also working as a voice over artist and book editor. Before going freelance full-time, Whitney worked in content and email marketing for Calendly, Salesforce, and Litmus, among others. When she's not at her desk, you can find her reading a good book, listening to Elton John and Linkin Park, enjoying some craft beer, or planning her next trip to London.
