A study of out‐sourcing versus in‐sourcing tasks within a project value chain

Abstract

PurposeThe purpose of this paper is to investigate a case of in‐sourcing a key resource verses using the standard mode of operation of utilizing an established out‐sourcing firm. The studied organisation is a large telecommunication firm in North America. The aim of the paper is to illustrate how a new approach to the organisational procurement decision making process to facilitate competitive advantage was influenced by simplicity rather than simple cost reduction.Design/methodology/approachSingle illustrative case study testing the usefulness of the composite out‐sourcing decision framework decision making framework together with a clear focus on total value adding elements of service delivery.FindingsThe analysis that in‐sourcing critical tasks or processes are advantageous to the case study organization as well as to the smaller internal department that it directly impacts.Research limitations/implicationsWhen undertaking business projects or programs of projects, there are many cases where business processes may be outsourced or sub‐contracted. While out‐sourcing does, and will in the future, play a large role in cost reduction and giving the buying firm the ability to focus on core competencies, there is still the niche market to in‐source critical tasks and retain critical resources. Decisions need to be based on value contribution rather than simple cost reduction.Originality/valueThis paper's value has been to illustrate some frameworks, tools and techniques used to explain how a particular insourcing/outsourcing decision was undertaken in a business project context and it explains the rationale behind decisions being made.