Insourcing - Does it Work?

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Going into Thomas Friedman's book The World is Flat I was planning to read all about globalization and outsourcing. Due to that plan I was thrown off when in the first chapter of his book he also mentions insourcing. A concept that I had before his mention I been unfamiliar with. All of this got me thinking about what is insourcing and does it work?

Wikipedia defines insourcing the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation.

So instead of sending a job overseas to an organization that specializes in a given task you are going to send the job to an organization located in your given country. Friedman discusses in the following video a UPS example of insourcing.

Friendman UPS example

It is amazing to me that a UPS worker could be fixing my laptop and also delivering my pizza. Insourcing can provide a valuable way for a company to provide expertise to an organization in a given task while keeping that expertise only an arms length away. The largest barrier to insourcing that I see is that outsourcing seems to provide a much greater economic benefit. So for generally outsourcable tasks like call centers it is so much more cost efficient to send your calls overseas where wage expectancy is so much lower. For this reason I think that insourcing could work but not on the scale that outsourcing can. It could however, be a key piece to the puzzle in winning over people who swear off globalization as a terrible thing. One last insourcing video that can show you a new "Made in America" idea.

Made in America

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Thanks for linking to the Made in America video! I found it to be interesting that the some of the same forces that pushed some American companies to outsource to other countries are now pushing the same companies to come back to America. The global economy is truly a dynamic environment.

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