Insourcing vs Outsourcing: Pros & Cons

Insourcing vs Outsourcing: Pros & Cons

What would you choose - apples or oranges?

Well in the IT industry, what will you choose insourcing or outsourcing?

Both terms seem to have gained an immense amount of popularity across the globe, especially after the COVID pandemic. And there comes the most critical aspect, which one to choose?

The following post focuses on what is insource, how is it beneficial, what is outsourced and how is it beneficial, and of course how are these two aspects different from each other. 

So without any further delay, let’s get started!

With short project cycles, effective management, and guaranteed ROI, can you get it all! In all, making a choice between choosing outsourcing or an insourcing company is a hard nut to crack.

Fret not! Read the following post on outsourcing vs insourcing and you don’t have to worry though! 

Understanding the concept of Insourcing 

So what is insourcing? Well, as the name implies, insourcing is defined as when you are more likely to gain extra employees who are already working for other companies.

It’s more like hiring additional staff members whenever required. Basically, your business task is carried out by an implanted onsite team, that’s what is meant by insourcing. 

Now, why is insourcing pretty much in vogue? Well, one of the obvious advantages of considering insourcing is that it turns out to be pretty flexible.

So when you are willing to recruit members outside to conduct a specific task, that’s what insourcing means. 

Now let’s say there is a specific need that you need to take care of. This need is something that can be taken care of by an outsider only.

So what you can think of is to hire a few more professionals from outside for that particular need and relieve them once the task is over.

You see, here the insource staff tends to stay for a particular time period or work only. As soon as the contracted period is over, the external staff members are paid and relieved.

Now how is insourcing beneficial? 

First and foremost, insourcing is usually done when you don’t have enough manpower or resources.

So instead of incorporating everything right from the infrastructure to everything else, simply, consider hiring new employees for the time being.

Apart from these, there are several other crucial reasons stating the need for insourcing. 

  • Quick and accurate decisions can be taken
  • You can balance in-house and external team members and try to achieve the best possible outcomes.
  • Mergers and acquisitions always lead to great outcomes.


Benefits of Insourcing

#1 Better quality

One of the most crucial benefits of insourcing is that it leads to better quality.  You see, here there is a huge scope of quality control. Wondering how? Well, even if you hire employees from third-party service providers, there is a huge scope of having complete control over your project. Also, you can communicate seamlessly with them in regard to what is the progress and what kind of resources are used, etc. In addition, your insource teams do offer great flexibility and see that the project is well-aligned with the evolving business objectives.


#2 Specific needs are taken care of

 Another interesting aspect of insourcing is that here the project is conducted to deliver a specific need. So you might end up receiving similar services as your competitors but that doesn’t mean, it will make you anything less. You see there are a plethora of software development companies available that tend to offer such insourcing services to multiple business ventures. The key is to find out whether they are able to identify your unique pain points and provide a personalized solution instead of a cookie-cutter one.


 #3 Cost-effective approach

Another intimidating benefit offered by insourcing is that here you are bound to receive a cost-effective approach. Yes, at first it may seem that you are spending pretty extravagantly but trust me, that’s not the case! Technically speaking, insourcing means all the parts of the project are available in the same place. So repurchasing different equipment is simply out of the question here.


#4 Communication becomes easy

Though you are hiring external team members when you are willing to insure. Just know that communication can be more effective at each and every level. You see, since here all the staff members are working in the same time zone and everyone is present especially when crucial meetings are conducted. Also, not to mention that close proximity does ensure seamless communication. In addition, there is no scope for any kind of cultural differences.

Now enough said about insourcing, it’s time to consider outsourcing.

Understanding the concept of Outsourcing

As the name implies, outsourcing is a mere practice of hiring a party outside a company or even the country to conduct business projects on your behalf.

You see earlier, in-house teams were compelled to do so. Fortunately, that’s not the case anymore! You see post the COVID pandemic, outsourcing seems to be gaining quite momentum since it saves lots and lots of time, energy, and of course, money! 

It may quite interest you to know that the concept of outsourcing was incorporated back in the year 1989 and today, it seems to be one of the most crucial aspects of conducting business, especially in today’s cut-throat competitive times. 

One of the obvious yet most amazing benefits of considering outsourcing is that it assists a lot in reducing the overall labor cost.

Here you try seeking assistance from third-party service providers. Basically, these providers are located overseas.

As a result, you can perform the same task as your competitor but at the least price. In addition, several other overhead expenses can be avoided. 

Now there are several types of outsourcing services available.

For example, companies can choose onshore service providers (those who reside within your country or region), nearshore providers (Those who are in the neighboring country but similar time zone), and my favorite offshore (Those who reside overseas but do not compromise in regards to the quality of the product).

Why do businesses consider outsourcing?

  • Endless Growth Opportunities
  • Long-term revenues and profits
  • Reduce the development costs
  • Focus on the core competencies


Outsourcing is basically said when two parties not living in the same country tend to agree to conduct a software development project within a specific time.

Both parties are supposed to sign a contract or should I say a non-disclosure agreement. So that there is no scope for any unnecessary mishaps.  

Let me try explaining the concept by giving an example. Let’s say, you have a bank and you are willing to outsource customer service operations.

Now, what will you do? You will start looking for third-party service providers who have the knack for handling customer-facing inquiries or complaints.

Once you do this, you will be able to focus on your core competencies and give your end customers a rare sense of satisfaction at the same time. 

Further, I would like to mention certain benefits of considering outsourcing services for your upcoming development project.


Benefits of Outsourcing

#1 No wasting time to recruit new employees

Initially, recruitment or hiring new employees might seem easy but to be precise. It’s way more difficult. When you try recruiting employees all by yourself, what happens is that ample of your time and resource is wasted while conducting the recruitment process. And even if you are done recruiting, there is a fair chance that the employee might leave the job whenever he feels like it. As a result, you are back to square one!


When you outsource third-party service providers, you no longer have to focus on recruiting new and new employees as well as getting them settled, negotiating unnecessarily, and whatnot! 


#2 Seamless access to a wide range of talent pools

Another interesting aspect to take into account is that you get seamless access to a wide range of programmers and developers, each one with different skills and experience. Here you get to choose from this amazing pool. Unlike insourcing you are no longer limited to hiring professionals from within your region or country. All you have to do is find out several ways through which you can collaborate effectively.


For example, consider using Skype, Zoom, Trello, Basecamp, and several other tools and technologies to make your offshore software development project more interesting.


#3 Intellectual property protection

You see today data seems to have become pretty much more valuable than money. Data theft is something that is not acceptable in today’s digital era. Well, every organization opting for insourcing or outsourcing services must sign the Non-disclosure agreement where the service provider has no right to share or misuse any confidential information of the organization. As a result, the risk of potential theft is lowered significantly.


#4 Cost-effective

Outsourcing software development services turn out to be way more cost-effective than insourcing. Yes, that’s right! When you try outsourcing software development services, especially from destinations where the tax is comparatively low, you are bound to save ample money. Some of the best outsourcing destinations to take into account include the Philippines, India, Brazil, China, and a lot more!

Insourcing vs Outsourcing - Which is Better?

So basically, it’s time for a showdown!

Do you see why any business would consider insourcing or outsourcing? Well, it’s when they lack any kind of resources or are willing to extend their existing teams.

Overall, both insourcing and outsourcing serve as an important aspect for organizations, be it of any size or industry vertical.

So where exactly the difference lies?






When you require in-house employees to accomplish a project

When you want to save money and look out for more talent, especially across the globe.


Insourcing is highly preferable for conducting long-term projects

Outsourcing is preferred for conducting short-term projects.


Insourcing might turn out to be a bit more pricey outsourcing

Outsourcing is way more cost-effective than insourcing.


Risks are pretty low when you tend to insource software development services

Risks are pretty high when you consider outsourcing.


Well, to be precise both insourcing and outsourcing offer a wide range of benefits and advantages but all I can say when it comes to choosing one, the answer is it depends on your needs and requirements.

I hope the following post did turn out to be helpful. In case, if there are any doubts or queries, feel free to drop us a message here.

Article by: Charles Richard, 
Business Analyst, Writer, 
TatvaSoft UK


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