Reasons to consider insourcing

Failure to realize anticipated cost savings from outsourcing deals can spur insourcing move

A growing number of companies are considering abandoning their outsourcers in favor of internal expertise. General Motors has drawn perhaps the most headlines lately for bringing IT back in-house, but the auto maker is far from unique, write Andy Sealock and Christopher Stacy in a post at Forbes.

Sealock and Stacy, consultants with the firm Pace Harmon, write that many firms are considering looking at insourcing for key operations in part because outsourcing efforts failed to meet their expectations, among other reasons.

"Deals have fallen short of expectations from a financial and/or service delivery perspective," they write. "Companies may find that services from an outsource provider cost more than expected due to hidden or unforeseen costs (e.g., increased travel to delivery centers, landed resources in domestic company offices), the need to supplement services with additional in-house staff and/or additional suppliers due to shortfalls of the outsource provider, or that 'soft costs' of dealing with a third party and geographic separation are degrading efficiency and quality."

Other reasons the authors see for turning to insourcing are a desire for in-house expertise and pressures from the marketplace.

For more:
- see post by Sealock and Stacy

More about reasons for insourcing:
GM to hire 3000 IT pros away from outsourcer
Union Pacific's strategy for building in-house IT
'Insourcing' reflects changes that impact the bottom line