Taxonomy for Insourcing in the Aerospace Industry

The executive and legislative branches agree that there has been too much outsourcing of government work in the past. The best option is a combination of insourcing and outsourcing, which has traditionally been the way the government has conducted business. Bringing a service back in house or insourcing as it is known, is a difficult decision that cannot be based on cost alone. Cost does not reveal the whole picture and it would suggest that the decision to outsource should not be based only on cost. Ultimately the question is under what conditions should a process or service be insourced? The Office of Management and Budget (OMB) circulars and Government Accounting Office (GAO) reports provide general guidelines for such decision making but nothing truly definitive. There is current literature suggesting frameworks for the various aspects of the process, but no framework exists for the entire process. The purpose of this paper is to develop a taxonomy so that a decision framework can be developed that considers the optimal solution for the long term financial gain, corporate strategy, and continued sustainment of the corporation in the insourcing decision process. A review of current literature for this paper suggests that such a decision needs to be based on six categories: cost, corporate knowledge and economic environment, knowledge, laws and regulations, relationships, and metrics and monitoring. These are quantifiable factors that a manager can base the decision on. However the making the insourcing decision must also consider factors that are not quantifiable or predictable.