Insourcing

What it means

Insourcing brings back in-house work the company used to buy outside: its own accountant, its own payroll officer, its own IT. The opposite is outsourcing, and the choice between them is operational, not ideological.

It works where the volume fills a post, where the work is tightly woven into other processes, and where the value lies in someone being continuously present rather than in an output once a month.

Insourcing need not be all or nothing. A partial arrangement is common: an in-house person takes over day-to-day posting and invoicing, while payroll, tax returns and the annual accounts stay with the external firm. The decision is made activity by activity, depending on where the volume lies and where the expertise is that a single employee would struggle to cover.

How it works in practice

The real cost of an employee is not the salary but the total cost of employment plus software, training, holiday cover, substitutability and management time. Substitutability is usually the weak point in a small company.

Before deciding it is worth doing capacity planning and writing the procedures down as SOPs - otherwise the know-how moves into one person’s head and leaves with them.

When a client decides to move the books to its own employee, we prepare the handover as we would any takeover of the books, just in the opposite direction: agreed balances, a list of open items, internal policies and access to the electronic mailbox and the tax portal. For a few months afterwards we answer the new colleague’s questions until they are at home in the work.

What to watch out for

Insourcing to save money often does not: in accounting and payroll part of the fee buys being current with the law and the provider’s own liability. And the switch is made as of a closed period with agreed balances, not mid-year.

A frequent mistake is that access to the bank, the accounting software and the tax portal is set up in one employee’s name. When they leave, the company spends weeks getting back to its own data while deadlines keep running. Accounts should belong to the company, with at least two authorised people, and handing over every access belongs in offboarding.