Outsourcing – Insourcing: Advantages and Disadvantages

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Table of Contents

Advantages of insourcing
Disadvantages of insourcing
Advantages of outsourcing
Disadvantages of outsourcing
Recommendations

Advantages of insourcing

To begin with, insourcing research is by the company employees who have a better understanding and knowledge of the company. They understand the company’s requirements and expectation therefore; conduct research in a way that satisfies the company’s goals and objectives. In addition, insourcing promotes high degrees of quality control in the company. Quality control refers to the maintaining of the standards of manufacturing products through product testing against the specifications provided. This process ensures that the product manufactured is consumable by clients at the price set by the company. Insourcing also promotes good relationships between decision makers and the researchers thus enabling the two parties to work towards a common goal, which is achieving the research agendas.

Insourcing tends to be cheaper to a company than outsourcing. Research costs are lower if a company has the business volume that is required to achieve an economy of scale. Hiring a researcher from outside the company proves to be expensive for most companies. Insourcing also allows the company management to oversee the whole research procedure. This way, they can contribute in the research from time to time and give advice in case of any difficulties the research team is facing. It also can oversee the use of funds allocated for the research and ensure that they no mismanagement of the funds.

Disadvantages of insourcing

High research costs can occur due to lack of resources and incompetence among researchers. The company researchers might have less focus that research professionals. These company researchers may also lack experience and expertise that research professionals have. Company politics might affect the outcome and integrity of the research. In addition, company researchers might have to perform multiple roles causing confusion to them. Lack of consistency in the research outcomes might inconvenience the company in terms of time they need to produce a certain product.

Advantages of outsourcing

Using a different firm to carry out research is advantageous since they have experience hence perform the job efficiently than how insourcing would. Outside firms have access to diverse and professional researchers such as mathematicians, economists, statisticians and psychologists. Insourcing research would not have these kind of professionals. Outsourcing also encourages confidentiality of companies they work for since it is one of their policies. This therefore prevents stealing of ideas amongst production companies.

Disadvantages of outsourcing

Using outsourced researchers makes it difficult for the company to manage the process. In this case, misappropriation of funds might occur making it more expensive for the company to complete the research. Outside firms might not understand the company’s objective and clients’ needs while carrying out research and making conclusions. There is no relations with the outsourcing firm hence, making it difficult for the company’s management to communicate with the firm.

Recommendations

To ensure that the company chooses the most efficient method of research, the company should compare the advantages of outsourcing and insourcing and settle on the on the most convenient for them. They should focus on the technology used in both scenarios, human resources available in the company, the company’s view on risk taking and the availability of participants for the insourcing research. For instance, does West Island Products have better technology than the outsourcing firm does?

Advantages

This process of weighing options is useful since it enables the company to choose the most suitable method for the company. It gives the company confidence that the method of research they use is profitable.

Disadvantages

This evaluation process might prove to be expensive for the company since it requires expert opinions. In addition, the company might end up choosing an expensive research method yet, there is no guarantee that the method will be efficient and productive.

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