If you work in HR, you’ve likely encountered the term “insourcing.” Simply put, insourcing is the practice of bringing a task or process in-house, rather than outsourcing it to a third-party provider.
For HR teams, insourcing can involve managing leave and accommodations, recruitment, and other essential functions internally. While traditional insourcing often relied on burdening HR teams with manual tasks, technological advancements have changed the game. With modern HR tools and automation, businesses can keep core HR functions in house while driving productivity, boosting efficiency, and providing a much better employee experience.
In this article, we’ll explore insourcing in more detail, discuss how it differs from other approaches, and help you consider whether it’s the right approach for your organization.
What is insourcing?
When an organization insources a process or function, internal employees perform all tasks involved. Insourcing can also refer to bringing something previously outsourced back in house again. For example, a company that uses a staffing firm can instead choose to hire its own recruiters. This allows them to manage talent acquisition in-house.
Some HR teams insource leave and accommodations management. A company that chooses insourcing handles much or all of its leave and accommodations program internally.
For some HR pros, the thought of insourcing leave and accommodations is nightmarish. Many assume that insourcing is a do-it-yourself approach involving significant manual work. Some worry that insourcing means calculating leave in a spreadsheet and tracking accommodations with sticky notes.
Take Purdue University for example. Before the school upgraded its tech stack, it used a spreadsheet and basic database software to manage leave across three campuses.
Managing leave and accommodations in-house manually can be a huge challenge. If your organization grows quickly, requests can ultimately overwhelm HR team members — making it much more likely an error will occur and increase the risk of a compliance issue
However, with the right technology, HR can keep their programs in-house, boost the number of cases a leave manager can handle, all without the complexities and cost of outsourcing.
How does insourcing work?
Insourcing works by bringing each part of the leave and accommodations processes in house. Let’s say an employee is going to have a baby. It’s up to HR to calculate the worker’s eligibility for leave, certify their time off, and facilitate their return to work. If the employee comes back to work with a disability such as post-partum depression, HR will need to discuss and implement the right accommodation.
This example illustrates the defining trait of insourcing: With insourcing, no part of the leave and accommodations process leaves the company. Sometimes, however, organizations choose to partially insource the leave and accommodations process. Before upgrading its leave platform, Carvana used a third party administrator for Family and Medical Leave Act (FMLA) claims but handled leave under its company policies on its own.
Insourcing requires HR to be deeply familiar with its organization’s policies and the statutes set up by applicable federal, state, and local law. If they lack detailed knowledge of the laws that protect their employees, they may make costly compliance mistakes. Consider, for example, the many forms of leave and accommodations the pregnant employee could be eligible for:
- The FMLA may provide the employee with unpaid, job-protected leave, depending on the employee’s tenure and other factors.
- If the employee resides in a state with paid family leave, they might also be eligible for time off under a state statute. If this employee lived in California, for example, they would likely have time off under the California Family Rights Act, California Paid Family Leave, or both.
- The employee’s postpartum depression would almost undoubtedly qualify them for an accommodation under both the Americans with Disabilities Act and the relatively new Pregnant Workers Fairness Act.
Employers can achieve compliance with laws like these when they take advantage of leave management technology like AbsenceSoft. Our platform allows employers to manage their own leave and accommodations programs while equipping them with the information they need to stay compliant.
How does insourcing differ from other options?
Organizations have three choices when it comes to leave management: insourcing, outsourcing, and co-sourcing. When a company outsources their leave management processes, they tap a third party to receive leave requests, administer time off, track leave usage, and facilitate return to work.
Outsourcing is a popular approach, perhaps because it feels like a familiar option. After all, it’s common for organizations to outsource certain parts of HR. To save on personnel costs, an organization may hire a staffing firm instead of a recruiting team. Similarly, some companies outsource payroll, benefits administration, or employee relations management.
Many companies choose to outsource leave management, as well. According to a 2021 survey from the Disability Management Employer Coalition, 24% of companies outsource leave management, while 45% use insourcing and 32% use co-sourcing methods.
To understand how outsourcing plays out in an organization, let’s return to the example of the pregnant worker. If this worker is employed by a company that outsources its leave management duties, the worker would likely be instructed to approach the leave vendor to arrange their time off. The leave vendor would inform the worker of how much time they can access, when they should return to work, and answer the employee’s questions.
This example highlights the reason many organizations choose outsourcing: outsourcing appears to be a hands-off approach to leave management. It’s important to realize, however, that while outsourcing significantly alleviates HR, it does not fully eliminate HR’s leave workload.
HR will still need to review more complicated cases and weigh in with extra information, for instance. And HR will have to manage the vendor and field one-off questions and concerns from their own employees.
More importantly, when HR outsources leave management, it doesn’t outsource liability. A leave management vendor does not assume responsibility for an organization’s employees. If it incorrectly denies someone’s leave, the employer will still face the consequences.
Is insourcing right for my organization?
For some employers, outsourcing is an appropriate way to approach leave and accommodations management. As the DMEC survey revealed, however, more employers are choosing to insource. This data raises an important question: why?
Insourcing’s rise in popularity is largely thanks to recent advancements in technology. With the right leave management software, employers that bring leave and accommodations management in-house aren’t bombarded with administrative tasks. Instead, they’re equipped with tools that allow them to facilitate leave and accommodations smoothly, offering a compassionate, personalized experience to employees along the way.
Technology-powered insourcing offers HR and employers many advantages that make this method a strategic choice.
- A purpose-built leave and accommodations platform prioritizes compliance above all. A good platform will not only streamline eligibility calculations, but also will ensure communication and decisions occur within the required timeline.
- An in-house, technology-forward approach allows employers to craft leave and accommodations experiences that mirror their employer brand. HR can design its own workflows, touch points, and language.
- With modern software, employers can take advantage of automation, allowing HR to focus more on employees and other parts of their jobs.
Realize the benefits of insourcing with AbsenceSoft
The AbsenceSoft platform allows HR to take advantage of all that insourcing can offer — with none of the mess. To learn more about how our platform can streamline your approach to leave and accommodations management, book a demo today.