The Case for Insourcing

Over the past two years, the face of the workforce has changed drastically. Companies eliminated bonuses, froze salaries, and downsized staff. Those employees who remained worked harder and longer. Now, with an economic recovery seemingly in motion, companies are developing new, creative ways to repair the damage.

Mike Gamble

Today's workforce, and the one we can expect to see for at least the imminent future, is more creative than ever before. It's a melting pot of employee types—permanent hires, temporary and contingent staff, 1099 contractors, and now—the newest addition to the mix—insourced labor.

Although insourced employees work onsite, they are employed by a third-party staffing supplier or a contract research organization, and supervised by a project manager from that organization.

For pharmaceutical companies hesitant to rebuild their full-time workforces, but in need of a way to meet increasing demand, insourcing presents a viable solution. Here's why:

Flexibility. Insourcing gives companies elasticity to staff up quickly if workloads escalate. Similarly, if projects dissipate or clinical trials end, staff can be scaled back without a round of layoffs.

Keeping headcount down. The human resources department might not have approved an increase in permanent staff yet, but there is still work that needs to be done. Insourcing solves this problem. Because insourced employees aren't managed by anyone in-house, and typically are allocated through an outsourcing budget, they aren't added to the headcount.

Control. Insourced engagements often support functions that had been outsourced previously, but that yielded better results when completed internally. By insourcing, companies keep control over the process, improve communication, and eliminate data-transfer issues.

Cost. Because the pharmaceutical company is only paying for the talent and management of these employees, costs are significantly less than traditional outsourced services.

Available space on-site. Layoffs performed during the recession likely left open laboratory and desk space. These resources can be used by insourced employees, who can complete processes crucial to the organization in-house. With processes and standard operating procedures already in place, all pharmaceutical companies need is the necessary talent to drive a function or project.

Elimination of co-employment risk. Risk is the key differentiator between using temporary labor versus an insourced team. With temporary labor, the sponsor company's manager supervises the staff, and the temp has limited benefits. Because of potential legal problems involved with this type of employment, companies typically limit the amount of time they employ a temp, thus creating constant turnover and increasing training costs. With insourcing, the resources are clearly under the direction and control of the service provider, and employees typically have access to a comprehensive benefits plan. This eases legal concerns and allows resources to be deployed for the life of the engagement.

In the scientific arena, tasks that are crucial to the outcome of the project, but that are repetitive in nature and can have metrics developed around them, are ideal for insourcing. These include positions in quality control testing, clinical testing, environmental monitoring, validation, and manufacturing. By insourcing these functions, the sponsor's employees can focus instead on development work and process-improvement issues.

Pharmaceutical companies aren't the only benefactors of insourcing arrangements. Insourced employees can benefit, too, by earning varying levels of responsibility and the opportunity to switch projects during their tenure.

Mike Gamble is the vice president of Life Science Talent Solutions at Yoh, Philadelphia, PA, michael.gamble@yoh.com