Companies looking to expand their products and services have two options to meet growing labor demands—take the extra work in-house or hire a third party. Using internal resources to complete a task or project is called insourcing and finding another company to fill that need is outsourcing. Essential functions like IT, customer service, marketing and candidate recruitment can be insourced to existing employees or outsourced to third-party companies. Insourcing and outsourcing have their advantages and disadvantages.
What is Insourcing?
Insourcing utilizes an existing employee or department to achieve a company goal or objective. For example, a company might want to launch a new product and decides to use its existing staff for marketing. Or an employer meets a new goal to expand customer service by training its existing support staff. Insourcing keeps new processes and services in-house and typically on-site. Insourcing can also include hiring new employees. A small business might decide it now needs an internal IT department, so it needs to hire new staff to support that directive.
What is Outsourcing?
Outsourcing is when a company hires a workforce outside of the organization. These hires are not employees of the company. Many businesses hire third party companies for IT, accounting and consulting work. For example, if a company is expanding quickly, it may need help processing extra tax forms for new employees or it may hire an outside company to supplement sales. Outsourced roles typically aren’t permanent, giving the company the ability to change providers or take the job back in-house.
Insourcing vs Outsourcing
When should you insource a job or task and when should you outsource it? Both insourcing and outsourcing offer options for completing a task or service. And both have benefits and challenges.
Benefits and Challenges of Insourcing: Insourcing keeps the work in-house and under the supervision of your company. You can control the environment, timelines and how the work is completed. Insourcing can also be viewed as an investment in your company and its employees.
According to Entrepreneur, insourcing helps create a collaborative environment which promotes creative thinking. It allows you to develop your talent, investing in skills that can improve your overall productivity. Insourcing can also impact your company culture. When you train and promote from within, your company culture benefits. Employees who are provided with development and succession opportunities know the company is invested in them. Your employees are more likely to remain loyal and want to help your company achieve its overall goals.
The challenge for insourcing is it can be costly. A company may have to set up an entirely new infrastructure and acquire resources. There could also be extra expenses to train and even hire more employees to meet demand. An employee learning management system is one solution. It allows companies to control training by uploading custom content in multiple formats, including instructor-led, on-the-job or online training.
Benefits and Challenges of Outsourcing: Outsourcing is initially more cost-efficient. Many companies choose to outsource tasks overseas, which pay workers a fraction of the U.S. minimum wage. Outsourcing can also be a faster labor solution since third-party companies already have solutions and resources in place.
The challenges for outsourcing are the company has no control over the work environment or management of employees. Consider if your company is known for excellent customer service or superior quality. If those services or products are outsourced, you may not able to enforce or manage how they are completed.
How to Insource Employee Recruiting
Filling labor needs for a new project or goal begins with recruiting. But, recruiting employees is costly. It is averaged that traditional hiring costs $4,000 per employee. That math isn’t too far fetched considering a 30-day job posting can cost anywhere from $249 to $495. Add that expense to all the behind-the-scenes costs like background checks, hours spent sorting through candidates, employer branding and recruitment agency fees, and reducing hiring costs quickly becomes a high priority. Plus, when recruiting is done in-house, you control the process, the candidate selection and can put your company culture front and center.
Taking recruiting in-house is made easier with the right ATS.
Insourcing your recruiting and training can save your company time and money, while putting you in control of the process. Arcoro offers a variety of solutions to help hire and grow your employees, like an ATS, Onboarding and Learning Management System. Not only do all of the cloud-based modules work together, they come dedicated account management and customer service.
Schedule a demo of Arcoro to see how easy and cost-efficient it can be to take recruiting and training in-house.