Insourcing vs. Outsourcing: What’s the Difference?

Over the years, the way businesses operate and distribute workloads has been innovated to evolve. Today, there are two ways organizations can disseminate labor: insourcing and outsourcing. Both approaches have their advantages and disadvantages, but at the end of the day, which one to use all boils down to what best suits your business needs.

In a nutshell, both approaches make fantastic alternatives for acquiring skilled people to help run your business without hiring permanent employees. If you’re looking to source people to help operate your business, you must understand both options to find their similarities and differences and which one can be more effective for your business.

The Difference between Insourcing and Outsourcing

Insourcing is a business practice that uses internal resources to perform business functions. For instance, an organization signs the help of an employee to carry out a project or task. This approach does not involve signing up the support of a third-party organization to do business tasks. This gives the organization more control over the process. However, it can be more expensive in the long run.

Meanwhile, outsourcing refers to the process of working with an external organization to hire people outside of the company and assist you with specific business tasks and functions. Let’s say you have piles of accounts payable; you could outsource the job to a company specializing in the field. This business practice is commonplace in industries like transport, marketing, telecommunications, and travel.

Choose the Best Option for your Organization

While both approaches have common goals—to enhance business efficiency and maximize resources—you must ensure that you understand what insourcing and outsourcing actually mean to choose the better business solution that fits your needs. Check out this handy infographic guide that simplifies both terms and illustrates each practice’s pros and cons.