Regional insourcing
Encyclopedia
Regional insourcing is a process in which a company establishes satellite locations for specific entities of their business at cites that are away from their headquarters. Through this process, companies can take advantage of the benefits one state may have over another (i.e. taxes, education, or workforce) in regards to specific fields of employment.
This concept is directly correlated with the more common business model of insourcing
, which focuses on the delegating or re-assigning of procedures, functions, or jobs from production within a business in one location to an internal entity that specializes in that operation in another location. This allows companies to streamline production, boost competency, and increase their bottom line.
Regional insourcing takes this competitive strategy one step further by applying the classical argument of Adam Smith
, which posits that two nations would benefit more from one another by trading the goods that they are more proficient at manufacturing. For instance, if France produced wine better than England, but England was more apt at manufacturing wool, both nations would benefit from trading with one another, rather than trying to produce both wool and wine on their own. Regional In-Sourcing applies this concept to modern business development. Companies still create separate entities for specific tasks, as was the case with insourcing
, but rather than these operations being performed under the same roof as the rest of the company, they are undertaken in an environment that is far more suitable to their specific purpose.
Regional insourcing is not outsourcing
, as companies do not contract their business out to separate companies resulting in a new business partnership. Instead, they simply relocate certain enterprises underneath the umbrella of the parent company to locations that are more hospitable to their specific needs.
This concept is directly correlated with the more common business model of insourcing
Insourcing
Insourcing is the opposite of outsourcing; that is insourcing is often defined as the delegation of operations or jobs from production within a business to an internal entity that specializes in that operation...
, which focuses on the delegating or re-assigning of procedures, functions, or jobs from production within a business in one location to an internal entity that specializes in that operation in another location. This allows companies to streamline production, boost competency, and increase their bottom line.
Regional insourcing takes this competitive strategy one step further by applying the classical argument of Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
, which posits that two nations would benefit more from one another by trading the goods that they are more proficient at manufacturing. For instance, if France produced wine better than England, but England was more apt at manufacturing wool, both nations would benefit from trading with one another, rather than trying to produce both wool and wine on their own. Regional In-Sourcing applies this concept to modern business development. Companies still create separate entities for specific tasks, as was the case with insourcing
Insourcing
Insourcing is the opposite of outsourcing; that is insourcing is often defined as the delegation of operations or jobs from production within a business to an internal entity that specializes in that operation...
, but rather than these operations being performed under the same roof as the rest of the company, they are undertaken in an environment that is far more suitable to their specific purpose.
Regional insourcing is not outsourcing
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
, as companies do not contract their business out to separate companies resulting in a new business partnership. Instead, they simply relocate certain enterprises underneath the umbrella of the parent company to locations that are more hospitable to their specific needs.