Inoutsourcing

Inoutsourcing is a hybrid sourcing strategy that combines insourcing and outsourcing within a single organization or process. It leaves some activities in internal teams and contracts others to external providers, aiming to balance control, cost, and flexibility. The term is informal and used variably across industries.

Overview: Inoutsourcing is chosen when a company wants to preserve strategic capabilities in-house while leveraging external expertise for non-core or fluctuating workloads. It can involve internal units acting as service providers to other units, or external vendors delivering services under structured governance, such as managed services.

Typologies: Arrangements vary by geography (onshore, nearshore, offshore), by function (design, development, maintenance, support), and by delivery model (shared services, multisourcing).

Benefits: Potential cost savings, faster scalability, access to specialized skills, and the ability to focus internal leadership on core activities. It can also reduce capital needs and improve time-to-market.

Risks: Coordination complexity, governance overhead, potential misalignment of incentives, data security concerns, and vendor dependence. Hidden costs and quality control challenges can arise if the model is not well designed.

Implementation: Requires a strategic rationale, a capabilities assessment, a clear governance model, robust SLAs, and a transition plan. Change management and data protection policies are essential, as is ongoing performance measurement.

Examples: A company keeps core product design in-house while outsourcing testing and customer support; a manufacturer retains manufacturing but outsources logistics; a multinational uses internal shared services for accounting while outsourcing payroll processing to a specialist firm.