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You have an interesting take on outsourcing. Companies usually outsource to obtain skills they don't have in house or to eliminate in-house staff positions; in virtually all cases, to reduce costs.
If a company has outsourced, for example, housekeeping, mailroom or food service, how will they be able to "insource" if they've already eliminated these internal positions? Why would this be less expensive, if they had outsourced to reduce costs in the first place?
Hi,
I tend to agree with Tom. The whole gamut of outsourcing is to reduce operational cost.
The Principal employers or the client companies normally have much higher salary structures and connected overheads that are eliminated or drasticllay reduced by outsourcing.
The other reason for outsourcing is the nature of non core functions being carried out by the company employees. This increases the focus of the principal employer on their core functions.
The comparatively intangible difference is the control over the functions. With the current levels of automation and performance metrics that also becomes tangible.
Outsourcing can be a cost reducer if the in-house labor costs have grown beyond industry standard levels (driven by long-term employees) or by lack of leadership getting the in-house staff to perform to industry expected levels. An outsourced model uses the labor for a specific scope and charges you when the scope goes beyond that. This model allows greater efficiency for the client as well as the vendor who can use the unused labor for another client elsewhere. The key is knowing what scope is really desired, and having the leadership to keep the staff fully employed and effective. The bottomline is the tasks should be clear and known - you're going to pay for the labor somwehere, somehow. So, if its costing too much your labor is too high or the scope isn't robust enough.