When should an organization outsource a job and when should an organization do the job in-house? Let’s consider an example.
Consider a book publisher. Rather than having a staff of full-time writers whom it would pay to write books, the publisher bids for books and negotiates with agents.
Book publishers outsource because they want to have access to the maximum diversity of ideas and information. A publisher thinks its chances of publishing interesting books are better it leaves the door open to lots of different writers, and so it’s willing to endure the hassle of having to sign each book on a case-by-case basis. The benefits of leveraging the actions and intelligence of the crowds outweigh the costs.
Need to tap into the collective intelligence? Then outsource it.
Need things done quickly? Then do it in-house.
— Extracted from The Wisdom of Crowds by James Suroweicki