How does insourcing blur the boundaries of a company's business?
### Insourcing: Inviting External Experts Into Your Own Kitchen
Okay, let’s talk about this topic. Imagine you’re someone curious about the business world. I’ll explain in plain language how "insourcing" blurs the lines of the "company" as we know it.
Insourcing: When a Company Brings Outsiders Inside Its Walls
Hi! I’m excited to discuss this with you.
Traditionally, a company is like a fortress with clear walls. Inside are its own employees handling core operations; outside are other companies—clients or suppliers. You either handle tasks in-house (DIY) or outsource them to external parties (outsourcing).
But "insourcing" is like installing a revolving door in that wall.
An analogy:
You’re hosting a grand dinner party. Your cooking skills are limited, but you want guests to feel the food is "your" creation. What do you do?
- Traditional Outsourcing: You order dishes from a restaurant. They cook, deliver, and slap your label on them. Guests know you didn’t cook—you bought it.
- Insourcing: You invite a five-star hotel’s chef team into your kitchen. They use your cookware, even your ingredients, to prepare meals on-site. Guests arrive to see chefs (wearing either the hotel’s uniforms or your custom ones) bustling in your steaming kitchen. Now, is this feast "yours" or the "hotel’s"? The boundary blurs, doesn’t it?
This "bringing chefs into your kitchen" analogy captures insourcing’s essence. It’s not just hiring a chef; it’s embedding an entire professional team and their workflow into your company to execute a task.
How Insourcing Blurs a Company’s "Boundaries"
Insourcing makes company boundaries fluid—like ink in water—through three key dimensions:
1. Blurred Organizational Boundaries: "Your People" or "Mine"?
This is the most visible blur.
Back to the analogy: Who does the chef in your kitchen answer to? They might follow your instructions ("Make more spicy dishes tonight"), but their salary, training, and career development are managed by their hotel.
In the real business world, take UPS and Toshiba as a classic example.
Many see UPS as just a delivery service. But in their insourcing partnership, if your Toshiba laptop breaks, UPS drivers in select regions collect it and bring it to a UPS-owned repair hub. Crucially, this hub employs UPS staff—trained and certified by Toshiba—who fix your device with Toshiba parts to Toshiba’s standards before returning it.
From your perspective: You contact Toshiba support, and the repair feels like Toshiba’s service.
In reality: The entire logistics, repair, and delivery chain runs on UPS—a "delivery company."
So we ask:
- Is UPS a logistics firm or an IT service provider?
- Toshiba’s core business is designing and selling computers. But is after-sales repair—a critical service—Toshiba’s operation or UPS’s?
Boundaries vanish. UPS stops being an "external vendor" and becomes an invisible yet vital "internal organ" in Toshiba’s service chain.
2. Blurred Core Competencies: Can You "Borrow" a Rival’s Strength?
Historically, a company’s survival relied on its unique "core competency"—a guarded, in-house strength.
For example, Nike’s edge is brand marketing and design, so it outsources manufacturing. Clear separation.
But insourcing muddies this line. UPS’s core competency is world-class logistics and efficiency. Through insourcing, Toshiba effectively borrows UPS’s strength as its own. Toshiba gains a global repair network overnight—without decades of investment.
This is like a martial arts master lending their inner power to a skilled but energy-lacking fighter. Combined, they become unstoppable. But whose strength is it now? Core competencies lose their black-and-white boundaries.
3. Blurred Corporate Culture: Two "Tribes" Under One Roof
Picture shared office space:
Some are Company A’s employees, enjoying its PTO, perks, and culture.
Others are from Company B, working side-by-side with A’s team on projects—yet loyal to B’s hierarchy, goals, and rewards.
Over time:
- Collaboration blurs: Can Company A’s manager direct Company B’s staff? In urgent projects, inevitably yes—shattering traditional management lines.
- Identity blurs: Do Company B’s employees feel part of Company A’s team or just "external support"? This confuses loyalties, challenging cohesion and culture.
Companies transform from "pure" cultural units into blended ecosystems of diverse backgrounds and affiliations.
To Summarize
Insourcing acts as a catalyst. It turns clear "client-vendor" relationships into deeply integrated, symbiotic partnerships.
It blurs:
- Physical and organizational lines: Your team works in my space; mine operates in yours.
- Strategic and capability lines: Your core strength becomes part of my business.
- People and cultural lines: We fight as one team, despite different employers.
Ultimately, company boundaries resemble a permeable membrane. They maintain independence while selectively absorbing external talent, processes, and capabilities—merging them internally to create value no single firm could achieve alone. This epitomizes "The World Is Flat" in business strategy.