Insourcing

Insourcing is the commencement of performing a business function that could be contracted out internally: either with the help of a third-party provider who performs the task on-site, or by conducting said task independently. Very often it is seen as opposite of outsourcing. Insourcing is a business decision that is often made to maintain control of critical production or competencies. Insourcing is widely used in production to reduce costs of taxes, labor and transportation.

Insourcing is also defined as bringing a third party outsourcer to work inside a company's facility. For example, an IT outsourcing provider may be hired to service a company's IT department while working inside the company's facilities. In addition to contracting an entire team of workers from an outsourcing provider, outside experts are sometimes hired as consultants (to improve certain processes etc.) and the internal staff thereafter implements their recommendations. It may also refer to bringing in foreign nationals to do jobs at lower wages. An example would be a coal mine which lists a foreign language (i.e. Mandarin Chinese) as a job prerequisite that citizens tend not to study. Since the labour pool does not have the listed skill a foreign worker permit can be obtained allowing the importation of Chinese workers.

Insourcing also includes a company assigning a project, be it services, R&D or manufacturing, to a subsidiary or to another company that is within the same country of the company’s location; this is also referred to as "Outsourcing". However, the term Outsourcing usually refers to a project that was being performed in-house but now will be performed by another company; either within or outside the company’s country. Whereas, Insourcing can be any project that is required by the company to meet its needs; the project is not necessarily being performed in-house. Insourcing also includes the “reshoring” of projects when a company brings home projects that are performed in another country and now will be performed in the company’s country; either inside or outside the company.

To those who are concerned that nations may be losing a net amount of jobs due to outsourcing, some point out that insourcing also occurs. According to a study by Mary Amiti and Shang-Jin Wei, in the United States, the United Kingdom, and many other industrialized countries more jobs are insourced than outsourced. They found that out of all the countries in the world they studied, the United States and the United Kingdom actually have the largest net trade surpluses in business services. Countries with a net deficit in business services include Indonesia, Germany and Ireland.

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