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What You Should Know about Insourcing

by: Sarah Joson

Friday, June 1, 2012 | Outsourcing News |

Outsourcing is still a business process that is gaining ground year after year, but even with the growing trend, some companies that have previously outsourced certain processes found themselves absorbing the services back home. Some of the possible reasons for this are: a directive from the CEO that affects the company’s sourcing strategy, as a solution to an outsourcing deal gone wrong, and even a combination of outsourcing and insourcing. 

Factors to consider before insourcing

An article written by ISG Director Kyle Spencer at info.ISG-One.com shows that various factors can indeed affect a business leader’s position regarding insourcing. Even a hybrid of outsourcing and insourcing is often needed just to align the processes of a company.

The article also highlights several things that can affect an originally outsourced operation as it is being transitioned to insourcing. In some cases, it is actually harder to insource a process because strategies need to be re-organized and re-aligned with the goals of a company. These are some of the things that business leaders need to closely look into if ever they decide to bring operations back home:

1. Have a concrete plan.
If possible, prepare a sample case and list all the possible situations that may occur during the transition. Align goals with the risks and challenges that can affect the operation. Once that is done, executives should test the business model to see if the process is actually attainable and which business factors will be affected. After that, you now have a concrete business plan that you can present to upper management for approval.

2. Define the goals of the operation.
What do you want to achieve and why do you want to insource? These are the questions that you should be able to answer before taking action. Having a “blueprint” will enable companies to eliminate risks and confusion that could affect future operations.

3. Coordinate with the service provider.
If there’s anyone who knows about the process more than you do, it would definitely be the service provider. You will also need to clarify crucial factors such as ownership of assets, transition costs, and even staff turnover.

4. Double check the possible outcome.
Services will surely become susceptible to new challenges during the transition. It would be a good idea to be ready for issues before it can affect the quality of the service.

5. Insourcing could be a means for new opportunities.
Since it’s virtually a new project or blank canvas that can be moulded into a new operation for different functions, there would be more room for improvement and it can enable business owners to design the operation in a way that all the tools can be maximized.

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