In-House

By
rjonesx
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What is ‘In-House’

In-house refers to conducting an activity or operation within a company, instead of relying on outsourcing. A firm uses its own employees and time to keep a division or business activity, such as financing or brokering, in-house.

Explaining ‘In-House’

The determination as to whether to keep activities in-house or to outsource often involves analyzing the various costs and associated risks. How these costs are calculated may vary depending on the size and nature of the core business.

Functional Benefits of Maintaining In-House Services

A firm may decide to keep certain activities in-house, a process that is at times referred to as insourcing, such as accounting, payroll, marketing or technical support. While it is common for some companies to outsource those divisions, a firm may maintain flexibility in those operations by keeping them in-house. Additionally, it may allow the business to exert higher levels of control over the actions of the divisions by keeping the services and personnel under direct control. It may also pose fewer security risks depending on the kinds of data that would have to be supplied to an outside party should the activity be outsourced.

Financial Benefits of Maintaining In-House Services

When dealing with customers, a firm may try to keep the entire transaction in-house. For example, in-house financing is a common practice in certain industries. This form of financing works by using the firm’s own resources to extend the customer’s credit with the firm potentially benefiting from any associated interest payments in exchange for assuming the risk associated with default.

Risks of Outsourcing

Outsourcing involves contracting out certain business activities for completion by a third party. Often, the expectations regarding the third party’s performance are outlined within a contract, specifying which tasks should be accomplished along with any associated deadlines.

Further Reading

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