Making the Transition From Outsourcing to Insourcing

by Alison Green on April 28, 2014

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Alison Green is a consultant, author and management expert. On her blog, Ask a Manager, she answers readers’ questions on an array of topics, such as how to ask for a raise, how to act in a second interview, or whether you might be in danger of getting fired, and much more.

Today, she’s guest blogging for Modis on a hot topic in the IT world: outsourcing vs. insourcing, and how to hire for permanent IT positions. Welcome, Alison! 

The Transition from Outsourcing to Insourcing

Recently, a reader posed an common concern for IT staffing:

I work for an IT staffing company, and a lot of our clients come to us because they want to bring previously outsourced IT functions back in-house. They’re finding that insourcing IT gives them greater speed and control over business change, and despite what many people believed during the great recession, can actually be more cost efficient than outsourced contracts.

As a result, we’re helping companies hire for a lot more permanent IT roles — things like Business Intelligence, Data Analysts, Application Developers, Infrastructure Architects and Help Desk Support roles.  However, switching from outsourcing to insourcing requires hiring and training an entire in-house workforce. What advice could you give to companies looking to make this transition?

There’s a reason that trends are moving away from outsourcing and back to insourcing: Outsourcing means giving up control over the quality of staff and how they operate, as well as losing the benefits of having a fully integrated team who truly get your culture and how you do things. And just as you mentioned, despite earlier trends toward outsourcing as a cost savings measure, the pendulum is now swinging back around, and companies are finding that insourcing can actually be more cost-effective in the long term. One high-profile example of this is General Motors, which is now moving to bring nearly all its IT work back in-house, after outsourcing about 90% of it in recent years. And a 2012 Deloitte study found that 79% of companies that have brought previously outsourced functions back in-house are either satisfied or extremely satisfied.

Insourcing I.T. also means that you’ll have experts in-house, available to work closely with other team members when you need them, which can have a dramatic effect on your ability to innovate, collaborate, and move quickly and nimbly. And of course, for many roles, it’s a huge advantage to have your staff right down the hall rather in vastly different time zones!

So, if you’re one of the companies making this move, what do you need to know in order to hire a great in-house IT team? Here are five crucial steps to hiring well:

1. Get clear on what you really need

Too often, hiring managers forget to distinguish between what the “must-have” qualities and skills are for the role and what are simply “nice-to-have” but not essential. Be sure that you’re not over-valuing experience using a particular type of software, when it could be quickly picked up by the right person, or rejecting a candidate for being overly shy if performing the job well doesn’t require an especially outgoing nature. That said…

2. Do pay attention to soft skills

It’s easy to be seduced by a candidate’s impressive resume, but the best experience and skills in the world won’t usually make up for trouble getting along with coworkers, lack of work ethic, or poor communication skills. Don’t get so focused on impressive skills that you forget to consider what it’s going to be like to work with the person every day.

3. See candidates in action

Just as a football coach wouldn’t hire a player without seeing him play, be sure should see candidates in action during your hiring process. Using exercises and work simulations can give you a huge amount of insight into how someone will actually perform on the job. It’s not uncommon for candidates who initially appeared strong to flounder when you give them a chance to demonstrate their skills – or for candidates who might not have interviewed beautifully to shine when you see them in action.

4. Put candidates at ease

When candidates are relaxed, you’ll get a better sense of who they really are. And after all, you want to find out what candidates are like day-to-day, not what they’re like in an stressful interview. So unless the job requires the ability to perform in intimidating, pressure-filled situations, take a friendly, not overly formal approach.

5. Don’t overlook red flags

If you spot red flags during the hiring process, take them seriously – especially if they’re about work ethic, attention to detail, integrity, or necessary skills. No matter how urgently you need to fill a vacancy, you’re nearly always better off keeping the job open and searching for the right person than hiring someone who isn’t quite right. You’ll spend far more time and energy dealing with the consequences of making the wrong hire than you’ll save by filling the opening quickly.

Still contemplating the transition?

Our latest white paper dives deep into the disadvantages of outsourcing, why insourcing IT talent is a growing trend and how you can build a talented team of IT professionals. Download your free copy today.

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