Navigating the Challenges of Insourcing

In this article resulting from Pace Harmon’s industry advisory report regarding insourcing, Christopher Stacy, senior associate, offers expert advice about how companies should approach insourcing to avoid missteps. Sample excerpts: “'Buyer behavior has changed during the last several years,' Stacy discovered. ‘Companies are more willing to take the risk to migrate,’ says Stacy, ‘and deciding how to set strategy for operations has also changed ... Buyers are willing to pay more in the near-term for in-house delivery, and expect a long-term ROI and revenue improvement, rather than just future efficiencies of delivery,' Stacy says… 'Repatriation is challenging, as are the coordination and timing that maintain continuity of service, particularly with a resource provider that’s losing its business. A frequent insourcing pitfall,' says Stacy, 'is failing to coordinate the transition with sufficient buffer contingencies…The loss of internal intellectual capital is a major challenge for companies that outsourced,' according to Stacy. He says they opted for blackbox legacy outsourcing deals with attitude of ‘I don’t care what you do, just manage the Service Level Agreement, that’s the result I care about.’ But Pace Harmon finds clients now seek a white box approach that keeps tabs on how work gets done. Otherwise, they must rebuild their internal organization ‘by creating something from nothing,’ says Stacy.”

CIO Insight