What is in-house?
In-house, or insourcing, refers to an activity performed within an organization using its own employees instead of relying on the help of outside parties to complete business tasks. Although outsourcing may be cheaper and save valuable time, in-house resources allow companies greater control over day-to-day operations.
One activity companies tend to keep in-house is accounting. With the help of payroll software, companies can calculate wages, taxes, and pre-and post-tax deductions to meet all federal and state requirements. This type of software ensures employees receive their wages promptly and accurately.
Common in-house operations
Companies typically use in-house operations when direct professional relationships are beneficial for development. Some common activities that are insourced include:
- Accounting: Companies keep accounting activities like payroll in-house due to their organizational complexity. With the help of payroll software, companies can calculate wages, taxes, and deductions to meet all federal and state requirements.
- Marketing: Using in-house teams for marketing saves time as employees know the company’s culture and are familiar with key items like their target audience and business goals.
- Financing: Even though companies assume the risk associated with default on payments, they may end up benefiting a customer’s interest payments.
- Human resource management: Companies tend to keep human resources (HR) in-house because this department relies heavily on relationship development.
Advantages of in-house operations
Companies that leverage their in-house talent might expect some of the following advantages.
- More control: When companies use internal resources, they can manage teams internally and control operations.
- Invested team members: Using internal resources and employees ensures everyone working on the project is directly invested. Teams that care about their company’s success have an advantage over outsourced talent.
- Timesaving: Even though it takes time to assemble an internal team, companies can get that time back once the in-house project begins.
- Professional development: New projects are a great way to improve an in-house team’s existing skills. If companies need specific talent, they can develop employees’ growth as they see fit. Employees learn and build on foundational skills, and companies can expect better results in the long run.
Disadvantages of in-house operations
An in-house team is an excellent option for companies that want greater control over all processes, but there are risks involved.
- Staffing and sizing issues: Sometimes companies are too small to justify hiring in-house for all roles. In these cases, they may outsource for areas like manufacturing, information technologies (IT), or legal.
- Higher costs: When choosing between hiring a team member and outsourcing a project, outsourcing may make more financial sense because hiring and paying an in-house team member can be costly. Companies should ensure they have enough work to keep in-house team members busy.
- Reduced application pool: In-house typically focuses on hiring from within a company; therefore, it shrinks the possibility of finding the perfect fit for the project.
- Lack of necessary skills: Not every project is a part of a team’s expertise, but training employees may be too expensive or time-consuming. It’s essential to consider the opportunity costs under these circumstances.
In-house vs. outsourcing
Before deciding whether to outsource or insource, companies should evaluate their business needs, analyze various costs, and understand associated risks.
Companies that use in-house operations hire and use their own employees and resources to complete a job or project. Keeping operations in-house may give a company more control over the tasks performed and pose a lower security risk.
Outsourcing is the process of hiring an external company to perform business activities. Companies outsource jobs to find someone with specialized skills or save on costs associated with full-time employees.
By outsourcing, companies can meet their business goals and save time and money they would’ve spent training in-house employees. Some commonly outsourced jobs include legal consultation, customer support, and information technologies (IT) support.
Amanda Hahn-Peters
Amanda Hahn-Peters is a freelance copywriter for G2. Born and raised in Florida, she graduated from Florida State University with a concentration in Mass Media Studies. When she’s not writing, you’ll find Amanda coaching triathletes, cuddling up with a good book, or at the theater catching the latest musical.
