At a recent meeting a member asked the Board for some
opinions about possibly "insourcing" his estimating needs.
He's presently using an external provider and paying enough that he
could perhaps hire an internal resource to replace that function
for about the same money. A few members favored the idea,
saying they'd rather have someone on their staff over which they
would have more "control". A number of members challenged the idea
that an internal resource would be better, and actually made a
decent case for how it might be worse. Here are some of those
viewpoints:
- Maintaining current know-how -- A person in the Estimating
outsourcing business is eating, sleeping and reading about
Estimating all the time. He's in a community of knowledge that
keeps him current, and he has experience with multiple other
clients to add to his knowledge base. An internal employee can
quickly get cut off from that knowledge stream, finding his current
technology awareness slowing considerably when he comes on
your staff and is asked to do lots of things other than Estimating,
(yes, that's likely to happen - see #3
below).
- Availability-- From an outside Estimating resource, you'd
expect 24/7 availability - if not the person generally assigned to
your account, an equally qualified person. That way
you're covered for holidays, vacations, sick days, and other
times when your in-house person won't be available. Not to mention
what happens if your in-house person quits (estimating
professionals are not known for
long-tenured employment).
- Cost -- There's a false economy in staffing your estimating
support internally. In most cases, it's not a 40-hour
work load. What happens during those other hours?
Tech mischief that costs you money. They think of seminars
they need to attend or certifications they need (for you to
pay for). They think of new software upgrades
and spend months with Excel creating their
better way than using what works. Their slack time
experimentation will cost you plenty of opportunities. You
might be surprised at how your estimating budget will go up, not
down, when you insource.
- Alternate utilization/opportunity cost -- Another member
asked "What is your revenue per employee?" Answer:
"$300,000" "So, if you're going to add someone to
your staff, might it not better be someone with skills to drive
or support another $300,000 in revenue? Why add headcount to
do something you're successfully buying now from the outside?"
This is a classic "alternative investment" question common
in MBA courses.
- Distraction -- When you take on non-core activities,
the core business gets less attention. You'll end up hiring
and managing another person who's not a direct contributor to
the core business.