Why Some Enterprises are Insourcing Their IT Departments

Ahold Delhaize, a major grocery group, already had plans in place to overhaul their supply chain and insource more talent before COVID-19 struck. While they could’ve delayed their plans when the pandemic hit, the group decided instead to accelerate. They realized that with the pandemic, bringing their distribution in-house would allow them to employ more creative solutions to find products their current distributors couldn’t, and they were right. Ahold Delhaize was able to get toilet paper from a supplier that usually stocked college campuses, and for Thanksgiving, they had their top 300 items stocked in the warehouse eight weeks ahead of schedule.

With the havoc to supply chains wrought by the COVID-19 pandemic, many U.S.-based enterprises have followed Ahold’s lead and are insourcing and reshoring everything from production and manufacturing to transportation and IT and developer functions. But why make such critical decisions during a time of unprecedented uncertainty? Uncertainty is exactly the reason – corporations realized that the way they had been doing business had previously unimagined risks.

IT teams have been part of that trend. Insourcing IT helps enterprises better align their procedures with company goals, provides greater security control, can insure against unplanned disruptions, and can even save money on some hidden costs associated with outsourcing. What’s more, enterprises need that talent close at hand as they overhaul their supply chain management and other corporate systems. Let’s take a deeper look at why some enterprises are choosing to insource their IT departments.

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Better business alignment and integration

When organizations insource their IT and dev departments, they gain better control over processes to align them with their business goals. Not only did Ahold Delhaize begin insourcing their distribution, but they also hired an entire team of specialists to oversee the transition. Your in-house team will have a deeper understanding of the company and you’ll have more control over the quality of the project since you can oversee the work at any stage. Additionally, communication is easier because the IT department is connected to all of the other departments in your organization.

With an in-house IT department, the employees you have are specially trained to meet your business needs, while outsourced IT staff might only cover more general roles. They can also offer more hands-on service for both your application and hardware needs. With outsourced professionals, you may also run into communications delays and other challenges that are less likely with insourced teams.

Also read: Accenture Study Shines Light on Path to IT-fueled Economic Growth

Greater security control

Insourcing your IT department also gives you greater control over your network security. With in-house IT and dev teams, it’s easier to know exactly who should be logging onto your network. If everyone is working in the office, you can also keep all important data on-premises, rather than having critical things like privileged accounts and source code in far-flung places. However, even with remote employees, a VPN could offer similar security features – and a “zero trust” approach would be even better, with access limited by role and device.

Along with better protection against hacks, insourcing provides greater control over your intellectual property. While there’s always some risk of intellectual property leaking, it’s smaller with insourced teams.

Improving time to market

If you need to improve your speed to market, insourcing is the way to go. With in-house staff, you can identify bottlenecks and discover issues more quickly. It’s easier to get a hold of your employees when you need them. Additionally, when you know your team better, you can assign tasks to the people best suited for them, increasing efficiency.

You also need to consider the global disruption caused by the pandemic, especially in the supply chain industry. Moving things closer to home can help you reduce risk. Outsourced IT departments can cause delays, especially if they act as a middleman between your corporate office and your supply chain. Even small delays can add up through the process, greatly reducing your speed to market.

The hidden costs of outsourcing

Outsourcing also has some hidden costs associated with it that you can avoid by insourcing. In software development, for example, even small alterations are usually accompanied by a change order fee. With insourced IT, those changes won’t cost you extra. Outsourcing can also create project delays, something that’s never been more critical to avoid.

Additionally, when outsourcing IT, you lose some control over the project. While your organization and the IT company will have agreed on the project and criteria, someone has to hold them accountable for what you agreed on and paid for. IT outsourcing contracts typically lose value between initiation and project completion.

Employee disengagement is also a problem with outsourcing for both internal and external IT staff. Internal IT staff may be frustrated when they have to hand off a project they’ve taken ownership of, and they may seek other employment opportunities and be costly to replace. Similarly, external IT teams may not have the same buy-in for the project that internal stakeholders would, potentially leading to an inferior product.

Also read: Balancing IT Spend with Caution in 2021

Switching to insourced talent

Insourcing IT and dev functions creates synergies with hiring procedures. To insource talent for your IT project, you first need to determine specifics and figure out what kind of specialists you’ll need. You’ll also want to choose people who are passionate about what your company offers. Insourced talent provides a level of buy-in that’s really difficult to find with outsourced options, and it can increase the quality of your projects.