MIS Assignment 8: Outsourcing and In-sourcing
{ Posted on 11:35 AM
by Ariel Serenado
}
For this assignment we are tasked to stand as to whether we prefer outsourcing or in-sourcing.
In some point of my discussions during the group reporting in HRM, I have made mentioned about outsourcing of a certain company that we adopted. In the case of the company we visited some services are actually outsourced, like their activities on counseling they actually outsourced teams, organizations that could handle the said activity in behalf of the employees who has the authority to do that kind of service. However, this certain companies also held companies in which the service involved is referred “in-house”. For me both in-house and in-source actually have identical meaning but then in-source is somewhat technical that anyone would doubt at some point, but both really have the same implications.
Before making into a firm preference I would like to emphasize first the distinct definition of the two – outsourcing and in-sourcing.
Outsourcing – What is Outsourcing?
For companies looking for a competitive advantage, outsourcing is a hot topic. The reason is the promise that outsourcing will help a company focus on more on it’s core competencies.
Outsourcing is contracting with other company or person to do a particular function. Almost every organization outsource in some way. Typically, the function being outsourced is considered non-core to the business. All insurance company, for example, might outsource its janitorial and landscaping operations to firms that specialize in those types of work since they are not related to insurance or strategic to the business, outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers.
Although outsourcing has been around as long as work specialization has existed, in recent history, companies began employing the outsourcing model to carry out narrow functions, such as payroll, bill and data entry. Those processes could be done more efficiently and therefore cost-effectively, by other companies with specialized tools and facilities and specially trained personnel.
Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. In most common forms are information technology outsourcing (ITO) a business process outsourcing (BPO). Business process outsourcing encompasses call center outsourcing, human resources outsourcing (HRO), finance and accounting outsourcing, and claims processing outsourcing. These outsourcing deals involve multi-year contracts that can run into hundreds of millions of client firm are transferred and become employees for the service providers. Dominant outsourcing service providers in the information technology outsourcing and business process outsourcing fields include IBM, EDS, CSC, HP, ACS, Accenture and Capgemini.
Some nimble companies that are short on time and money, such as start-up software publishers, apply multisourcing – using both internal and service provider staff – in order to speed up the time to launch. They hire a multitude of outsourcing service providers to handle almost all aspects of a new project, from product design, to software coding, to testing, to localization, and even to marketing and sales. In the context of outsourcing it encompasses four stages, these are the following:
1.) Strategic thinking, to develop the organization’s philosophy about the role of outsourcing in the activities. This stage is really vital to an organizations for this kind of thinking commonly results to a centralize manner of giving due importance to the specific roles of outsourcing for the betterment of the organization.
2.) Evaluation and selection, to decide on the appropriate outsourcing projects and potential locations for the work to be done and service providers to do it. This stage will asses the right and suited outsourcing activities for the organization to adapt.
3.) Contract development, to work out the legal, pricing and service level agreement (SLA) terms; and
4.) Outsourcing management or governance, to refine the ongoing working relationship between the client and outsourcing service providers. This stage must be taken into account especially that due and effective supervision will really affect the current business process being involved by the client and the outsourcing service providers.
In all cases, outsourcing success depends on three factors: executive-level support in the client organization for the outsourcing mission; and ample communication to affected employees; and the clients’ ability to manage its service providers. The outsourcing professionals in charge of the work on both the client and provider sides need a combination of skills in such areas as negotiation, communication, project management, the ability to understand the terms and conditions of the contracts and service level agreements (SLAs), and, above all, the willingness to be flexible as business needs change. The challenges of outsourcing become especially acute when the work is being done in a different country (offshored), since having an offshore transaction would mean having constraints on language, cultural and time zone differences.
Organizations who are interested in outsourcing are often curious to know more about disadvantages and advantages of offshoring. By gaining insights about the good and bad of outsourcing, organizations can decide if outsourcing is right for them. Most organization jump headlong into outsourcing, without actually finding out if outsourcing is good for their business. Before outsourcing, ensure that you are aware about the pros and cons of outsourcing. The advantages and disadvantages of outsourcing can help your organization decide if outsourcing is right for their business. The following are the advantages and disadvantages of “outsourcing”:
Advantages of Outsourcing
The benefits of outsourcing are:
Less capital expenditure – For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software.
Less management headache – For example, by outsourcing business process such as accounting, company nom longer has to hire and manage accounting personnel.
Focus on core competencies – Outsourcing non – core related processes will allow a business to focus more on its core competencies and strengths, giving it a competitive advantage.
Specific advantages of outsourcing are as follow:
If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more. In outsourcing, the advantages of outsourcing are more than the disadvantages of outsourcing. The pros of outsourcing have driven more organization to step into offshoring and experience the benefits that it has to offer.
Furthermore, one of the biggest advantages can be lower personnel costs. By outsourcing job duties to non-employees, a business does not have to pay consistent wages or offer additional employee benefits. The company may pay lower taxes because independent contractors, the people who complete the outsourced projects, pay their own withholding, social security, and other taxes. This can add up to substantial savings. Some businesses choose to take their outsourcing one step further by choosing a vendor, located in another part of the world. Doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country. The disadvantage is that these vendors may not understand English and communication is more difficult. Many times, outsourcing speeds up production time. Since the third-party vendor will only be concentrating on one specific task, instead of numerous office duties, actual production time can be greatly increased.
Some businesses choose to take their outsourcing one step further by choosing a vendor, located in another part of the world. Doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country. The disadvantage is that these vendors may not understand English and communication is more difficult.
Many times, outsourcing speeds up production time. Since the third-party vendor will only be concentrating on one specific task, instead of numerous office duties, actual production time can be greatly increased. In turn, it can cause community uproar and even a decrease in business and profits. This happens when local consumers make the decision to shop elsewhere, as a way to voice their disdain. Outsourcing customer service jobs, to foreign countries, is on the rise. Many large corporations including credit card companies, shopping networks and computer manufacturers are making this change. The problem with this is a lack of communication. It can be very frustrating for a consumer who is calling in with a customer service issue. When this individual cannot understand the customer service representative they are speaking with, it just causes more frustration and does little to solve the problem.
Disadvantages of Outsourcing
Before deciding on outsourcing your company's business process, keep in mind the disadvantages of outsourcing:
Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.
Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.
May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.
Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.
Moreover, here are the list of the advantages of outsourcing:
Now, let us discuss the advantages and disadvantages of In-sourcing.
What is In-sourcing?
In-sourcing
The opposite of outsourcing can be defined as in-sourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as in-sourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for in-sourcing because it enables them to maintain a better control of what they outsource. In-sourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. In-sourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for in-sourcing in order to cut down the cost of labor and taxes amongst others. The trend towards in-sourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards in-sourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by in-sourcing their work rather than outsourcing it. According to recent studies, there is more wok in-sourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and in-source work equally.
Moreover, In-sourcing is a business practice in which work that would otherwise have been contracted out is performed in house.
In-sourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. An example is the use of in-house engineers to write technical manuals for equipment they have designed, rather than sending the work to an outside technical writing firm. In this example, the engineers might have to take technical writing courses at a local college, university, or trade school before being able to complete the task successfully. Other challenges of in-sourcing include the possible purchase of additional hardware and/or software that is scalable and energy-efficient enough to deliver an adequate return on investment (ROI).
In-sourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is in-sourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.
Some advantages and disadvantages that encompasses In-sourcing:
Advantages to In-sourcing:
In-sourcing Innovation provides a straightforward depiction of why leading organizations are making innovation more systematic and structured.
There are also firms and organizations supporting the in-sourcing – FAIR supports efforts to “in-source” but advises a deliberate and systematic approach based on facts and analysis. The Federal Acquisition Innovation and Reform Institute (FAIR) support efforts to “in-source” critical positions and personnel so that the government possesses adequate organic capability to address the challenging and daunting tasks ahead of us. However, we recommend that the administration, Congress, and agencies proceed with caution, through a deliberate and systematic approach to in-sourcing based on facts and analysis. Agencies should also adopt realistic timelines for recruiting and integrating new personnel as well as developing new business processes, if required... Rushing to undo what has been in the making for years, perhaps decades will be counterproductive.
Guidance for in-sourcing should address the critical question of ‘inherently
governmental’ and core competencies. As the Obama administration, Congress, and agency leadership lay out guidance and legislation regarding positions that should be in-sourced, the most important questions that we should be asking are:
If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers. If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverable, outsourcing is again a good option.
If your work involves production, then it would be more ideal for your organization to opt for in-sourcing, as you can save on transportation costs and exercise a better control over your project.
It is not necessary to choose outsourcing over in-sourcing or vice versa. Your organization can outsource and in-source at the same time. By outsourcing and in-sourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!
the use of in-house personnel or an internal department to meet an organization's need for specific services. In-sourcing is seen as a reaction to the growing popularity of outsourcing that has not always met expectations. An in-sourcing strategy is chosen where it appears that a better service can be provided from internal resources than from an external supplier. In some cases, organizations opt for a combination of outsourcing and in-sourcing, in which external service providers work in cooperation with in-house personnel.
Sources:
http://www.ictstandards.com/Advantages_And_Disadvantages_Of_Outsourcing.htm
http://www.webspacestation.com/it-outsourcing-news/articles/outsourcing.html
http://www.outsource2india.com/why_outsource/articles/advantages-disadvantages-outsourcing.asp
http://www.articlesbase.com/management-articles/outsourcing-the-advantages-and-disadvantages-of-outsourcing-536182.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://www.sourcingmag.com/content/what_is_outsourcing.asp
http://www.thefairinstitute.org/downloads/The%20Move%20to%20Insourcing_June%202009.pdf
In some point of my discussions during the group reporting in HRM, I have made mentioned about outsourcing of a certain company that we adopted. In the case of the company we visited some services are actually outsourced, like their activities on counseling they actually outsourced teams, organizations that could handle the said activity in behalf of the employees who has the authority to do that kind of service. However, this certain companies also held companies in which the service involved is referred “in-house”. For me both in-house and in-source actually have identical meaning but then in-source is somewhat technical that anyone would doubt at some point, but both really have the same implications.
Before making into a firm preference I would like to emphasize first the distinct definition of the two – outsourcing and in-sourcing.
Outsourcing – What is Outsourcing?
For companies looking for a competitive advantage, outsourcing is a hot topic. The reason is the promise that outsourcing will help a company focus on more on it’s core competencies.
Outsourcing is contracting with other company or person to do a particular function. Almost every organization outsource in some way. Typically, the function being outsourced is considered non-core to the business. All insurance company, for example, might outsource its janitorial and landscaping operations to firms that specialize in those types of work since they are not related to insurance or strategic to the business, outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers.
Although outsourcing has been around as long as work specialization has existed, in recent history, companies began employing the outsourcing model to carry out narrow functions, such as payroll, bill and data entry. Those processes could be done more efficiently and therefore cost-effectively, by other companies with specialized tools and facilities and specially trained personnel.
Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. In most common forms are information technology outsourcing (ITO) a business process outsourcing (BPO). Business process outsourcing encompasses call center outsourcing, human resources outsourcing (HRO), finance and accounting outsourcing, and claims processing outsourcing. These outsourcing deals involve multi-year contracts that can run into hundreds of millions of client firm are transferred and become employees for the service providers. Dominant outsourcing service providers in the information technology outsourcing and business process outsourcing fields include IBM, EDS, CSC, HP, ACS, Accenture and Capgemini.
Some nimble companies that are short on time and money, such as start-up software publishers, apply multisourcing – using both internal and service provider staff – in order to speed up the time to launch. They hire a multitude of outsourcing service providers to handle almost all aspects of a new project, from product design, to software coding, to testing, to localization, and even to marketing and sales. In the context of outsourcing it encompasses four stages, these are the following:
1.) Strategic thinking, to develop the organization’s philosophy about the role of outsourcing in the activities. This stage is really vital to an organizations for this kind of thinking commonly results to a centralize manner of giving due importance to the specific roles of outsourcing for the betterment of the organization.
2.) Evaluation and selection, to decide on the appropriate outsourcing projects and potential locations for the work to be done and service providers to do it. This stage will asses the right and suited outsourcing activities for the organization to adapt.
3.) Contract development, to work out the legal, pricing and service level agreement (SLA) terms; and
4.) Outsourcing management or governance, to refine the ongoing working relationship between the client and outsourcing service providers. This stage must be taken into account especially that due and effective supervision will really affect the current business process being involved by the client and the outsourcing service providers.
In all cases, outsourcing success depends on three factors: executive-level support in the client organization for the outsourcing mission; and ample communication to affected employees; and the clients’ ability to manage its service providers. The outsourcing professionals in charge of the work on both the client and provider sides need a combination of skills in such areas as negotiation, communication, project management, the ability to understand the terms and conditions of the contracts and service level agreements (SLAs), and, above all, the willingness to be flexible as business needs change. The challenges of outsourcing become especially acute when the work is being done in a different country (offshored), since having an offshore transaction would mean having constraints on language, cultural and time zone differences.
Organizations who are interested in outsourcing are often curious to know more about disadvantages and advantages of offshoring. By gaining insights about the good and bad of outsourcing, organizations can decide if outsourcing is right for them. Most organization jump headlong into outsourcing, without actually finding out if outsourcing is good for their business. Before outsourcing, ensure that you are aware about the pros and cons of outsourcing. The advantages and disadvantages of outsourcing can help your organization decide if outsourcing is right for their business. The following are the advantages and disadvantages of “outsourcing”:
Advantages of Outsourcing
The benefits of outsourcing are:
Less capital expenditure – For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software.
Less management headache – For example, by outsourcing business process such as accounting, company nom longer has to hire and manage accounting personnel.
Focus on core competencies – Outsourcing non – core related processes will allow a business to focus more on its core competencies and strengths, giving it a competitive advantage.
Specific advantages of outsourcing are as follow:
- With outsourcing your organization can experience increased efficiency and productivity in non-core business processes
- Outsourcing can help you streamline your business operations
- Offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs amongst others
- Outsourcing can make your organization flexible to change
- You can experience an increased control of your business with outsourcing
- Your organization can save on investing in the latest technology, software and infrastructure as your outsourcing partner would be investing in these
- Outsourcing can give you assurance that your business process are being carried out efficiently, proficiently and within a fast turnaround time.
- By outsourcing, your company can save on management problems as your offshore partner will be managing the team who does your work
- By outsourcing, you can crater to the new and challenging demands of your customers.
- Outsourcing can help your organization to free up its cash flow
- Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas of your business
- Outsourcing can help your organization to cut is operational costs to more than half
If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more. In outsourcing, the advantages of outsourcing are more than the disadvantages of outsourcing. The pros of outsourcing have driven more organization to step into offshoring and experience the benefits that it has to offer.
Furthermore, one of the biggest advantages can be lower personnel costs. By outsourcing job duties to non-employees, a business does not have to pay consistent wages or offer additional employee benefits. The company may pay lower taxes because independent contractors, the people who complete the outsourced projects, pay their own withholding, social security, and other taxes. This can add up to substantial savings. Some businesses choose to take their outsourcing one step further by choosing a vendor, located in another part of the world. Doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country. The disadvantage is that these vendors may not understand English and communication is more difficult. Many times, outsourcing speeds up production time. Since the third-party vendor will only be concentrating on one specific task, instead of numerous office duties, actual production time can be greatly increased.
Some businesses choose to take their outsourcing one step further by choosing a vendor, located in another part of the world. Doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country. The disadvantage is that these vendors may not understand English and communication is more difficult.
Many times, outsourcing speeds up production time. Since the third-party vendor will only be concentrating on one specific task, instead of numerous office duties, actual production time can be greatly increased. In turn, it can cause community uproar and even a decrease in business and profits. This happens when local consumers make the decision to shop elsewhere, as a way to voice their disdain. Outsourcing customer service jobs, to foreign countries, is on the rise. Many large corporations including credit card companies, shopping networks and computer manufacturers are making this change. The problem with this is a lack of communication. It can be very frustrating for a consumer who is calling in with a customer service issue. When this individual cannot understand the customer service representative they are speaking with, it just causes more frustration and does little to solve the problem.
Disadvantages of Outsourcing
Before deciding on outsourcing your company's business process, keep in mind the disadvantages of outsourcing:
Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.
Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.
May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.
Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.
Moreover, here are the list of the advantages of outsourcing:
- At times, it is more cost-effective to conduct a particular business process, rather than outsourcing it
- While outsourcing services such as payroll processing services and tax preparation services, your outsourcing provider will be able to see your company’s confidential information and hence there is a threat to security and confidentiality in outsourcing
- When you begin to outsource your business processes, you might find it difficult to manage the offshore provider when compared to managing processes within your organization
- In case, your offshore service provider becomes bankrupt or goes out of business, your organization will have to immediately move your business processes in-house or find another outsourcing provider
- The employees in your organization might not like the idea of you outsourcing your processes and they might express lack of interest or lack of quality at work
- Your outsourcing provider might not be only providing services for your organization. Since your provider might be catering to the needs of several companies, there might be not be complete devotion to you and your company
- By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the business process that is outsourced
- In outsourcing, you may lose your control over the process that is outsourced
- Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract between companies. You might also have to spend a lot of time and effort in getting the contract signed
- With outsourcing, your organization might suffer from a lack of customer focus
- There can be several disadvantages in outsourcing, such as, renewing contracts, misunderstanding of the contract, lack of communication.
Now, let us discuss the advantages and disadvantages of In-sourcing.
What is In-sourcing?
In-sourcing
The opposite of outsourcing can be defined as in-sourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as in-sourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for in-sourcing because it enables them to maintain a better control of what they outsource. In-sourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. In-sourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for in-sourcing in order to cut down the cost of labor and taxes amongst others. The trend towards in-sourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards in-sourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by in-sourcing their work rather than outsourcing it. According to recent studies, there is more wok in-sourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and in-source work equally.
Moreover, In-sourcing is a business practice in which work that would otherwise have been contracted out is performed in house.
In-sourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. An example is the use of in-house engineers to write technical manuals for equipment they have designed, rather than sending the work to an outside technical writing firm. In this example, the engineers might have to take technical writing courses at a local college, university, or trade school before being able to complete the task successfully. Other challenges of in-sourcing include the possible purchase of additional hardware and/or software that is scalable and energy-efficient enough to deliver an adequate return on investment (ROI).
In-sourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is in-sourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.
Some advantages and disadvantages that encompasses In-sourcing:
Advantages to In-sourcing:
- Helps economy
- More jobs become available to others
- More expensive
- Less chance for new companies to succeed
In-sourcing Innovation provides a straightforward depiction of why leading organizations are making innovation more systematic and structured.
There are also firms and organizations supporting the in-sourcing – FAIR supports efforts to “in-source” but advises a deliberate and systematic approach based on facts and analysis. The Federal Acquisition Innovation and Reform Institute (FAIR) support efforts to “in-source” critical positions and personnel so that the government possesses adequate organic capability to address the challenging and daunting tasks ahead of us. However, we recommend that the administration, Congress, and agencies proceed with caution, through a deliberate and systematic approach to in-sourcing based on facts and analysis. Agencies should also adopt realistic timelines for recruiting and integrating new personnel as well as developing new business processes, if required... Rushing to undo what has been in the making for years, perhaps decades will be counterproductive.
Guidance for in-sourcing should address the critical question of ‘inherently
governmental’ and core competencies. As the Obama administration, Congress, and agency leadership lay out guidance and legislation regarding positions that should be in-sourced, the most important questions that we should be asking are:
- What are ‘inherently governmental’ positions? Are there any currently beingperformed by contractors and if so, how can they in-sourced immediately?
- What core competencies are critical to achieving agency and program missions?
- Which positions are tied to core competencies?
- What is the right balance between government versus contractor positions (in the short term and longer term)?
- Beyond number of positions, does the government have the ability to create
- Efficient business models to deliver capability and expertise being provided by
- Where should government still continue to leverage government expertise and technical capabilities?? How and when should positions be in-sourced? What are critical processes and policies, such as the hiring process and the pay system, that need to be improved to attract the required number of staff?
If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers. If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverable, outsourcing is again a good option.
If your work involves production, then it would be more ideal for your organization to opt for in-sourcing, as you can save on transportation costs and exercise a better control over your project.
It is not necessary to choose outsourcing over in-sourcing or vice versa. Your organization can outsource and in-source at the same time. By outsourcing and in-sourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!
the use of in-house personnel or an internal department to meet an organization's need for specific services. In-sourcing is seen as a reaction to the growing popularity of outsourcing that has not always met expectations. An in-sourcing strategy is chosen where it appears that a better service can be provided from internal resources than from an external supplier. In some cases, organizations opt for a combination of outsourcing and in-sourcing, in which external service providers work in cooperation with in-house personnel.
Sources:
http://www.ictstandards.com/Advantages_And_Disadvantages_Of_Outsourcing.htm
http://www.webspacestation.com/it-outsourcing-news/articles/outsourcing.html
http://www.outsource2india.com/why_outsource/articles/advantages-disadvantages-outsourcing.asp
http://www.articlesbase.com/management-articles/outsourcing-the-advantages-and-disadvantages-of-outsourcing-536182.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://www.sourcingmag.com/content/what_is_outsourcing.asp
http://www.thefairinstitute.org/downloads/The%20Move%20to%20Insourcing_June%202009.pdf
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