In or Out? A Question of Sourcing

Mike Donoghue is a member of a multinational information technology corporation where he collaborates on the communications guidelines and customer relationship strategies affecting the interactions with internal and external clients. He has analyzed, defined, designed and overseen processes for various engagements including product usability and customer satisfaction, best practice enterprise standardization, relationship/branding structures, and distribution effectiveness and direction. He has also established corporate library solutions to provide frameworks for sales, marketing, training, and support divisions.

  CRM   Outsourcing   Resource Management   Stakeholder Management  

Insourcing has been on the rise for the past few months. In case you haven’t heard the term before, insourcing is the inverse of outsourcing--the return of industry and labor needs to their native land after a period where these energies were farmed out to other locations. This about-face is not just because corporations feel sorry about the populations they affected with their outsourcing strategies, either--there are some real monetary reasons why the shift is occurring.

While outsourcing is not a totally failed experiment, in some respects it has worked too well. Certainly there are opportunities that have expanded into other places and created better conditions for workers and their environments, but that has also enabled many of them to be in a position to demand more--and reduce the profit margin that was once realized.

Wages have gone up to some degree (in some places, five times greater during the past decade); however, they still remain quite a bit lower than those in countries where the industries began and remain their competitive edge. For firms that are not dependent upon a large workforce though (those with a significant automated production process, for example), labor savings are somewhat skimpy--and that has made outsourcing more of a balancing act and less of a sure thing.

For some organizations, outsourcing has been a somewhat backdoor …

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