Insourcing is the opposite of outsourcing. It is a business practice of performing the business functions in-house that could be otherwise contracted to a third party. Insourcing is usually a business decision that is often made to take control of critical competencies. One company which has gained because of insourcing is Equa Terra.
Equa Terra is a firm providing advisory services in Information Technology and business process transformation. They help the clients to improve effectiveness and efficiency and reduce costs by improving the companies’ internal process delivery areas such as data center and provide cloud computing, shared services, outsourcing and insourcing solutions.
Equa Terra helps the companies with insourcing, companies which intend to bring back their outsourced operations back in-house. According to the analysts and advisors of Equa Terra, insourcing also involves challenges like initial outsourcing. In most of the cases, companies lack the expertise and specialists to bring back the outsourced process back in-house. Equa Terra has the history of helping many companies in their in-sourcing projects. Their experienced advisors help the companies to deal with the complexities involved in unwinding an outsourcing contract and bring back the processes soon.
Below we discuss a case study on how Equa Terra helped a company with insourcing.
Case study on Insourcing: Equa Terra
The organization was a major electric and utility player in North America and they wanted to optimize their IT budget. They assigned Equa Terra to analyze their complete sourcing strategies. Equa Terra helped two departments’ to go for insourcing IT services and they helped them in the process of insourcing and transition. This enabled the company to save considerable cost in IT and to improve service delivery.
The client was a major energy and utility company in North America.
The company wanted to reduce their IT budget to meet their post-merger financial needs. They needed to reduce the infrastructure and operations expense from $120 million to $104 million per year.
Solution by Equa Terra
Equa Terra as a first step studied the IT cost of all the departments and compared the current outsourcing prices with the potential in-house expenses. They also compared the outsourcing prices with the industry standards. They found that the prices charged by outsourcers were higher and two departments namely, Asset Management and Network Services preferred insourcing their IT process. Equa Terra further designed activities to help the clients with insourcing and transition. This included:
- Renegotiation of prices with the existing outsourcers to provide services to whole of the company other than Asset Management and Network Services arms.
- For the departments which opted for insourcing, termination letter were delivered and advisors provided the expertise to build the capabilities in-house.
- Helping in the transition process by providing coaching and training to the people of the company.
- Helping to integrate the process to facilitate the transition process quickly.
The insourcing efforts led the company to save considerably on the IT expense. Asset Management by adopting insourcing helped in recording $1 million annual savings annually and Network Services reported $2.3 million annual savings. Moreover, the effort also helped them to improve their service delivery.