Reposted from The Press Enterprise
‘Insourcing’ outsourcing to other American firms a benefit
04:03 PM PDT on Saturday, August 20, 2011
Outsourcing has become a dirty word in the American labor market, because it brings to mind the image of employers sending jobs overseas to countries where they can pay workers less than a dollar an hour.
Many companies have realized that outsourcing comes with its own set of problems, as customers complain when they have trouble understanding customer service reps based in other parts of the world. Outsourcing also can cause quality control or supply line issues, as seen in the recent Japanese earthquake.
However, many American companies have opted to outsource some of their in-house services to American contractors. This has been termed “insourcing.”
The work is contracted out of the company, but remains with American businesses. Companies often decide to insource auxiliary work, such as accounting, public relations and IT, which are important, but not central to the company’s mission.
Here are some of the reasons why companies opt to do this:
It’s cheaper. If you have to pay an in-house HR or IT person, it will probably cost you at least $3,000 a month in wages. When you add on benefits, you are looking at a total cost of more than $4,000 per month. For many companies it easier to pay an outside company $2,000 for the same services. Employers also know there is no way they can find a top-level employee for $2,000 per month.
It’s more efficient. When you insource some of your duties, you send the work to a person who is not going to get caught up in office politics or water cooler chat. Most contractors realize that if they don’t perform, they don’t get paid. This ensures that the work will be done right and done on time. Insourcing also allows you to hire experienced people who have the skills to complete projects faster.
Insourced workers can also adapt to change faster. One of the biggest complaints about working in a large organization is trying to implement a new procedure. The decision has to be kicked up several layers of management, and it can take months for it to be approved. With a contract employee, the decision can be made fairly quickly since they do not have to go through as many layers.
It allows you to focus on what you are really good at. If you make tires, you want to focus on making tires and not have to worry about accounting, HR or public relations. A large company has divisions to focus on these areas. But in small companies it is the owner that has to handle all of these duties. Of course, while he is doing this, he does not have time to focus on his actual business. Insourcing this kind of work to contractors frees up the owner’s time and allows him to concentrate on actually running his business.
From the points I have listed, it is easy to see why more and more American companies are moving to towards insourcing work, as a way of staying leaner and meaner. In today’s market companies are constantly looking for ways to shave fat off the bottom line, and increasingly that means sending work to local contractors who save time and money.
Sarah Cullins is president of Finesse Staffing in Rancho Cucamonga. Reach her via 909-466-9933 or firstname.lastname@example.org.